Bits Bucket For September 3, 2010
Post off-topic ideas, links and Craigslist finds here
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
November 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Wow, I really missed the blog yesterday. Couldn’t get on, although I see it was up later on. Anyhoo, Happy Labor Day Weekend to all! Now get out there and buy a house for the Gipper.
“…Now get out there and buy a house for the Gipper.”
I’m trying…I’m trying !!
The short sale I’m working on is held by one of my banks, so I marched into the bank and tried to have a bank VP buddy of mine find and call their Loss Mitigation Department to light a fire under their stupid lazy butts cause I was a customer and I wrote them a solid cash offer .
Sheesh…some pull she had. Those clowns told her 30-60 days, 1st come-first serve and all offers carefully reviewed and processed fairly.
I did find out that my below short sale asking price is about 20k below the independant short sale apprasial done for financing done about a 1 1/2 months ago for the previous SS that fell through.
Hey, I found out who the FB SS lender was and where they hide, I had offered them cash and close in 3 weeks and had my buddy call them saying “It’s me, customer mikey sitting right here with cash”
Sheesh…
“The short sale I’m working on is held by one of my banks, so I marched into the bank and tried to have a bank VP buddy of mine find and call their Loss Mitigation Department to light a fire under their stupid lazy butts cause I was a customer and I wrote them a solid cash offer.”
Mikey, we had a similar experience. My parents are good friends with one of the vice presidents of a bank holding a short sale on which we had submitted an offer. We thought if anyone could “light a fire” he could, but…nada. That’s when we heard the spiel about how banks are fearing what the regulators are going to do when/if they actually book all these losses. The house is still for sale, the online listing showing its winter snow-photographed glory.
There are millions of other houses…coming down the pike.
This is just a house, all business and not a home, unless of course, I do get it and am burning a log in the fireplace this winter.
Male homebuyer advantage (and why I don’t like house hunting with my better half):
We don’t tend to “fall in love” with houses the way gals do.
I read an article on the house situation this past week.
In it, the author compared renting as a merely “living together” arrangement, whereas buying a house was “a marriage.”
I disagree with the Professor. In our house, husband was inclined to offer asking price immediately, because he doesn’t like shopping of any kind.
I’m playing right along with you here in NoVA
‘Cept here , the Realtors have already learned how to “screw with you”, even with Short Sales!!
I have experienced:
1) lying & trying create a “sense of urgency” by falsely stating that a home is going into Foreclosure on such-and-such a date (and it’s not by looking up Public Records)
2) Collecting multiple contracts on SS’s & telling the would-be Purchasers that the “other offers are higher” to get you to go up in your offer
3) Inform your Agent that they are taking the listing off of the MLS system, when in fact they don’t - hoping to get even more Contracts, thus driving prices higher
Anyone else have any horror stories?
Yes, these all happened three times in the last three attempts on buying a short sale. Each time we were outbid from $5-10k
Some good points Shelby
If I hadn’t got the recent independent apprasial figure from the previous offer that fell through, I would have demanded my own and based my offer and my own current independent appraisal although I am not financing it.
I also sent a message my buyers agent to get the house off the MLS within a 2 week period if she can as their agent/lender has my accepted off with her FB. Their agent/lender has had plenty of time to collect second offers or I might walk if she can’t do that.
You don’t have a lot of leverage with agents and lenders in a short sale but you can attempt to put a little pressure on them when it has been on and off of the market and had serval deals fall theough in the past.
It’s on the books and another long, hard Wisconsin Winter is coming bankersters. Even my squirrles and chipmonks have been panicing the last 3 weeks.
Oh
I do have a little white, albino chipmunk that visits me. She is really a beautiful little thing. I hope that nothing gets her.
I also have an albino raven that visits.
Things are getting weird, if I see a little white elephant in my yard, my old friend, Jack Daniels and I are parting ways.
Perhaps you should get a checkup from my old friend, Doctor Zinfandel.
Responses.
1.) So if you’re not being reasonable, I can simply wait and talk to the bank directly? Or wait at the courthouse steps?
2.) Then you should sell this house to them. What other listings do you have.
3.) When you’re done fishing, call us back and we’ll CONSIDER reinstating our earlier offer.
Why do I have to buy a house to get Kippers? You just go to the store.
I’m confused.
Roidy
Me too. Out of desperation I used the Google wayback archives to read the blog posts from August 2007…got up to Aug 14, and I think Chris??? predicted chaos on the 15th because of massive redemptions..then someone else noted a giant sucking sound coming out of the far East. The next day’s archives were gone. Damn.
I about fainted when I opened up the local weekly fishwrap and saw the lead article. These folks must have gone completely nutz, and I am shocked to see the reporter even touting this, given what’s happened here during the bubble.
http://www.theobservernews.com/index.php?option=com_content&view=article&id=506&Itemid=115
South Hillsborough County (Tampa area) had to be one of the bubbliest areas in Florida. And like most bubble areas, real estate is deflating.
OTOH, there was a massive population shift to this area from other parts of West Central Florida. I guess we need a sportsplex and an arena to keep everyone entertained.
I am all for it as long as there are NO government subsidies, grants, tax exemptions, etc.
Unfortunately, that seldom happens.
And, if you’re a bookworm like me, you’ll find Joanna Cagan and Neil deMause’s Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit to be quite a read.
With regards from your HBB Librarian (who really missed the blog yesterday)…
But slim, I thought it was the fat pensions the government employees were getting that were a burden on taxpayers.
eco, I’m the one who’s always complaining about government pensions burdening the taxpayers. Our pensions, which were fattened in 2000, are bringing the state of California to ruin.
I have to agree 100% that CA’s public pensions, like NY’s, are insane. But those other scams at the taxpayers expense don’t help either.
Foreclosures soar in Mass. in July
By Jenifer B. McKim
Globe Staff / September 1, 2010
“Homeowners are still under duress, and the market isn’t getting any better,’’ said Vincent M. Valvo, editor-in-chief of the industry publication Banker & Tradesman. “We are likely to see increasing foreclosure activity for the next few months.’’
“Many of the [modifications] are going into redefault due mostly to rising unemployment,’’ he said. “All federal programs are much less successful than originally hoped.’’
http://www.boston.com/business/articles/2010/09/01/foreclosures_soar_in_mass_in_july/ - -
Again, foreclosures are overpriced here in California. In 2008-09 you could get a bargain on a foreclosure. Now, the price of the REO is much higher than it was as a short sale. And price reductions occur at a slower rate than regular sales.
Burglarized House? Oakland Police Want You to Know ‘We’re Not Coming’
Clear enough? Cutbacks in places like Oakland have forced police to prioritize crimes as never before, and to simply “stop responding to fraud, burglary and theft calls as officers focus limited resources on violent crime.”
Here are some of the other crimes for which Oakland says it will no longer be sending officers to the location unless it is “in-progress or there is a suspect on-scene:”
• Lost Property
• Theft
• Vandalism
• Vehicle Burglary
• Vehicle Tampering
• Residential Burglary
• Identity Theft
• Annoying and Harassing Phone Calls
• Barking Dog
• Violation of a Restraining Order
• Reporting a Runaway
• Violation of a Court Order
• Violation of a child custody order where one parent failed to return the child at a specified time.
http://legalblogwatch.typepad.com/legal_blog_watch/2010/08/burglarized-house-oakland-police-want-you-to-know-were-not-coming.html - 49k
They used to send officers to the location for identity theft? Why? To have the officer help the vicitim to sort through their financial papers? I always figured identity theft to the sort of thing where went to the local station to fill out and sign some papers because you were going to need copies of them to send to your credit card companies and the credit agencies.
A lot of people make predictions on this blog so here is mine. A dog year will go from 7 to 14 in Oakland.
A dog year will go from 7 to 14 in Oakland.
you think more dogs will get killed by would-be burglars?
you think more dogs will get killed by would-be burglars?
No, if nobody shows up to stop barking dogs in the middle of the night I think the neighbors will shut the dogs up themselves. Yes, I`m talking dog murder! Think about someone who has been out of work for 99 1/2 weeks, hasn`t paid their mortgage in a year and the dog next door has been barking for 2 hours at 2AM. It could get ugly.
jeff saturday,
So… basically they’re not going to enforce ‘anything’? Fine then, I guess they can all go home now?
How many times have we said this was inevitable here on this very blog? In Portland the cops stopped showing up for car theft several years ago. Now you’re just supposed to go online, download a form and MAIL it in!
You just know that’s got car thieves shaking in their fenced Nike’s!
“So… basically they’re not going to enforce ‘anything’?”
I’m sure they’re still out there writing revenue generating traffic citations.
The trouble with not responding to barking dog calls can be illustrated by a case from CA in the early 1990s. Neighbor called about a dog that just wouldn’t shut up. And the police never came.
Well, later that evening, someone else was out taking the family dog for a walk. A loose dog, obviously very distraught, led the dog walker to a murder scene. The victims? Nicole Brown Simpson and Ronald Goldman.
While every barking dog isn’t signaling a violent crime in progress, it’s a nuisance that needs to be dealt with. The barking laws here in Pima County, AZ, were recently strengthened, and I have noticed a positive difference around this neighborhood.
For more on nuisance barking, and effective laws against it, see BarkingDogs.net.
Which is why I always say “I think I see someone” when I call the police. It’s not a lie, it’s just uncertain information.
And how often do you have to call the police? Ever think of moving?
Remember to add, it looks like he might have a gun.
The obvious answer to this police department is to cut their funding further. If they then cut the services again, then cut their funding further.
They must realize that the people have contol over their government. A policy force with its union should not dictate to the people. Or just ignore crimes.
Replace them all with volunteers.
Insurance Guy,
Good suggestion sir. Truth is, only THEY can be heroes! Back in the early 90’s my brother was working on a jobsite. Next door someone was using a power washer at the asst. care facility.
The exhaust from the PW caught some leaves on fire and it spread rather quickly. My brother was a LOT of things but wimp wasn’t one of them. He acted quickly, got a garden hose, put the now garage-sized fire out, cleared the building and really took command of the situation.
When the Canby, OR FD finally… showed up Tom was pointing out what he thought were some residual “hot spots” and “the Chief” told him in no uncertain terms “WE have the situation under control! Next time just ‘call’ us”. Tom was disappointed, not so much that he didn’t get some sort of pat on the back but really more the inference that we’re all basically HELPLESS and are reliant on pub. safety emp’s for our very existence.
He thought to himself, “Yeah, next time I’ll just go back to work?”
Tom was disappointed, not so much that he didn’t get some sort of pat on the back but really more the inference that we’re all basically HELPLESS and are reliant on pub. safety emp’s for our very existence.
And then we have disasters like Hurricane Katrina, where the public safety infrastructure just isn’t there. In order to be useful in such instances, I’ve taken Community Emergency Response Team training, and I encourage other HBB-ers to do the same.
What’s the point in a burglary? Unless there’s witness’s or fingerprints on file, nothing would happen except a report taken for insurance purposes anyway.
“What’s the point in a burglary? Unless there’s witness’s or fingerprints on file, nothing would happen except a report taken for insurance purposes anyway.”
A warehouse belonging to an old boss of mine was broken into. The police found fingerprints. It took about five months, but the guy was caught and charged.
If the cops never respond to a burglary, whats to stop folks from filing false claims and collecting insurance? I think the prospect that the cops will show up to collect prints kind of deters some of that fraud, no?
Also, a lot of times the crooks come back around later to see if anyone noticed or called the cops. If they see nothing going on, guess what? They hit the place again. And again. And again.
And that is not hyperbole.
You do know that most crimes committed in this country are by… repeat offenders, right?
It’s kind of amusing how everyone gets up in arms about police threatening not to respond to non-violent offenses.
I think it actually makes good sense.
What they are doing is acknowledging the status quo—police almost NEVER do anything about non-violent crime anyway, other than take a statement and file a report. The report is needed for related insurance claims.
Since that’s the only value, moving that process online (e.g. download, fill out, and file this form) makes good sense.
let’s end the illusion that police do anything in non-violent situations other than serve as “trusted witnesses”. We can likely provide that function in far cheaper ways.
Prime,
My point exactly. We lived in Molalla, OR for years. Our Rep. was a great guy but he openly admitted unless there’s a BODY on the floor ( they’re basically -not- going to respond ) as you point out ‘anyway’.
I’ve come to grips w/ this long ago ( welcome to Rural Oregon ) and perhaps as you suggest, it’s high time the rest of us do too?
I wonder what would happen if I took the same course of (non)action when I was supposed to be in COURT?
These are officers that are there for the public. Sure there are crazies that call everyday complaining about something- but indeed part of their job, whether they like it or not, is to be there for the people who pay them. They’ve turned it from a non-profit pubic service into a for-profit retirement windfall perpetuated by endless tickets…
Maybe for some of them, but not for “Violation of a Restraining Order”??
If the police aren’t going to show up, then what value does a restraining order have? That turns one into a horrible he said-she said, and that’s a poor way to treat people.
PERSON: My dangerous ex just drove by my place. I have a restraining order.
911: Piss off lady. Stop being so sexy or stop being such a b*tch, and maybe you wouldn’t have a restraining order on a dangerous ex. Instead of sending a cop, I’d suggest you make better life choices.
Yeah, that one stood out to me as the worst, too. Most of the rest were somewhat understandable, because they mostly involved paperwork. But it seems to me ignoring restraining order violations will not end well, especially once it becomes common knowledge.
Not bad advice.
See my above post. When cops don’t respond, the crime is committed again.
Bet they still have plenty of time to hand out speeding tickets though.
Of course. More profit, less risk. What are you, some kinda damn socialeest/commie?
How income disparity causes depressions:
Robert Reich NYTimes
The economists Emmanuel Saez and Thomas Piketty examined tax returns from 1913 to 2008. They discovered an interesting pattern. In the late 1970s, the richest 1 percent of American families took in about 9 percent of the nation’s total income; by 2007, the top 1 percent took in 23.5 percent of total income.
It’s no coincidence that the last time income was this concentrated was in 1928. I do not mean to suggest that such astonishing consolidations of income at the top directly cause sharp economic declines. The connection is more subtle.
The rich spend a much smaller proportion of their incomes than the rest of us. So when they get a disproportionate share of total income, the economy is robbed of the demand it needs to keep growing and creating jobs.
What’s more, the rich don’t necessarily invest their earnings and savings in the American economy; they send them anywhere around the globe where they’ll summon the highest returns — sometimes that’s here, but often it’s the Cayman Islands, China or elsewhere. The rich also put their money into assets most likely to attract other big investors (commodities, stocks, dot-coms or real estate), which can become wildly inflated as a result.
cont’d
THE Great Depression and its aftermath demonstrate that there is only one way back to full recovery: through more widely shared prosperity. In the 1930s, the American economy was completely restructured. New Deal measures — Social Security, a 40-hour work week with time-and-a-half overtime, unemployment insurance, the right to form unions and bargain collectively, the minimum wage — leveled the playing field.
In the decades after World War II, legislation like the G.I. Bill, a vast expansion of public higher education and civil rights and voting rights laws further reduced economic inequality. Much of this was paid for with a 70 percent to 90 percent marginal income tax on the highest incomes. And as America’s middle class shared more of the economy’s gains, it was able to buy more of the goods and services the economy could provide. The result: rapid growth and more jobs.
Perhaps some truth, but the logic is circular.
What’s the circular logic?
It’s the “I ain’t sayin that income disparity causes Depressions, so the way to fix them is to redistribute wealth.” Maybe it’s not circular exactly, but there is something smelly about it.
If the economy isn’t recovering because of lack of demand and redistributing the wealth that is out there will increase demand, then the logic is flawless. It may be impossible to implement, but that isn’t a logic error. Let’s put some totally fake numbers in there to see.
Let us assume there is one rich person in a society and 9 poor ones (Hey, I said fake numbers). If the rich person gets more, he spends one tenth of what he gets. If the poor people get more, they spend all of what they get. So if you want to increase demand in the society by 10 through deficit spending, you can give the rich person 100 or split 10 among the poor people for about 1.1 each. It is way easier to increase demand by giving to the poor people because you don’t have to borrow as much to do it.
If you assume that there is no deficit spending, so the giving to the poor people has to come from the rich person (taxing the rich or redistributing) you can increase taxes on the rich person by about 11 and give it to the poor people. That will increase demand from the poor people by 11 (remember they spend every thing they get) and decreases the demand from the rich person by about 1.1. So that wealth redistribution has increased demand by 9.9.
Clearly it isn’t that simple, but if you accept the basic premise (rich people save a lot of their income while poor people spend nearly all of it) then the logic works.
Now Polly do you understand why I keep harping on a Direct $2-3000 pay down of the credit cards or zero interest for 5 years …if you have tons of cc debt you could “save” hundreds a month just in interest…
Let’s say the logic is true. Wouldn’t the same type of benefit also come from lowering the taxes the poor pay about the same as the rich for, like gas taxes, license and registration fees, parking fees and parking tickets, tolls, taxes on tires and auto repair, moving violation fees, cellphone taxes, taxes on a movie, taxes on water, garbage collection fees, etc, etc? Is the government offering to do that?
How do you implement a policy that eliminates gas taxes or cell phone taxes for poor people only? It would be an administrative nightmare. And as much as the money may act like a tax in a local budget, parking tickets are not taxes. They are a punishment for breaking parking regulations.
My point was that the government has no problem whatsoever sucking as many fees from the poor as they can. A buck saved by a poor guy on his car registration will also have a 100% chance of being spent right away. But it’s all the rich people’s fault, they’re evil! The government is your friend!
And the parking regulation usually broken is “you didn’t put enough money in our meter, which we placed here on the streets you paid for, so we could collect more taxes”.
But it’s all the rich people’s fault, they’re evil! The government is your friend!
That’s too AM radio extreme.
It’s more like this:
The rich people are not evil. It’s just that a lot of them are nowadays preditorial and parasitical.
And the government is not our friend. It’s more like a cop to protect us from the preditorial parasites.
When I think of preditorial parasites, the government comes to my mind way before rich people. So at best we have preditorial parasites protecting us from preditorial parasites. Great plan.
“Evil” sounds less fanatical than “preditorial parasites”.
When I think of preditorial parasites, the government comes to my mind way before rich people.
That is where I think you are mistaken. But I do place the blame more on corporatism than I do on “rich people”.
“Evil” sounds less fanatical than “preditorial parasites”.
I don’t know, maybe. But I don’t think a leach or a wolf are evil.
Dj
I understand why you harp on the credit card idea - it is a program that would benefit you personally. But it is administratively impossible as I have explained before. If something can’t be done, then it won’t be done. And that is ignoring the “fairness” stuff and the politics of it.
The only stimulus that can get past this Congress right now are tax cuts. And the Republicans will fight those to keep the Democrats from getting a “win.” There might be some way to put together a tax cut legislative program. Might be - but I wouldn’t hold my breath. The blatant money give aways are over for a few years unless it is in the context of legislation already passed but not fully implemented.
And the government is not our friend. It’s more like a cop to protect us from the preditorial [sic] parasites.
The government is there to protect the banks.
Polly:
I wont mention it again….I still have plenty of credit left on my cards, I was just thinking a way to get money to the people to spend asap….that’s all.
Zero interest would help those who are just about to default, and maybe give a little breathing room….
I guess i am angry because its going to be another helicopter drop to HoeOHnerz….
If something can’t be done, then it won’t be done.
“And the government is not our friend. It’s more like a cop to protect us from the preditorial parasites.”
That’s rich.
For preditorial parasites call 1???GOVERNMENT.
” In the late 1970s, the richest 1 percent of American families took in about 9 percent of the nation’s total income;”
Not only is it somewhat circular, but I haven’t heard too many people say anything positive about ‘the late 1970s’ from an economic standpoint (heck the republicans have run for 30 years on policies designed to prevent a return to the 1970s), so I don’t see the case being strongly made (perhaps lightly) that income equality has much to do with the overall economic picture.
Then you need to do more research, because it has everything to do with it.
Let me rephrase that. I’ve got a masters in finance and economics, and understand the GINI coefficient just fine.
I’ve not heard solid research that says it does. If you have some that does, then I’d like to see it.
Heck, I’ve never even heard what a ‘good level of income equality’ would be, because there is no such thing.
I’ve not heard solid research that says it does. If you have some that does, then I’d like to see it.
Do you have solid research that shows it doesn’t? Reich just showed that income inequality is greatest right before depressions. Where’s your opposing data?
Heck, I’ve never even heard what a ‘good level of income equality’ would be, because there is no such thing.
A good level of income equality would be similar to what we had in the 50s, 60s, and 70s. How’s that?
A good level of income equality would be similar to what we had in the 50s, 60s, and 70s. How’s that?
Good.
Good examples.
How about, instead of…
—-In the decades after World War II, legislation like the G.I. Bill, a vast expansion of public higher education and civil rights and voting rights laws further reduced economic inequality. Much of this was paid for with a 70 percent to 90 percent marginal income tax on the highest incomes. And as America’s middle class shared more of the economy’s gains, it was able to buy more of the goods—-
We had, after WWII, the last major manufacturing capacity in the world, we exported to everyone, we had the a middle class world view that reveled in being able to save 10 years for a house, which figured 1100sqft, one bath, three BR, maybe one car garage. We had maybe a trip to Disney (albeit a bit later in the p War game) once in a family lifetime, not a yearly stay at the Grand Floridian. Perhaps… all that other stuff you cite was irrelevant.
Or, perhaps not. Just be careful assuming correlation is causation.
As I pointed out below, South and Central America were also relatively untouched by the war. They may not have had our industrial base, but they were rich in commodities- just like Australia and Canada. The latter two countries went on to build wealthy middle class economies n the post-war years, utilizing the same types of reforms we did.
South and Central America lacked these reforms, and therefore didn’t develop middle class economies.
But according to Rio, they are currently adding millions to their middle while we are losing millions form our middle class.
But according to Rio, they are currently adding millions to their middle while we are losing millions form our middle class.
I don’t know about Spanish South America, but Brazil is doing that just now. (In the past 12 years or so)
It was done through public policy in co-operation with private industry.
It was done through public policy in co-operation with private industry.
Exactly. Brazil is now doing what we did in the post-war years. And it’s working, just like it once did for us.
We’ve been dismantling our reforms of the post-war years, and here we are- screwed.
you think our prsopetiy after WWII is because of high taxes?
you sure it doesn’t have anything to with the fact that all of our competitors were blown to hell and back?
Well that suggests an interesting way to try and get out of the depression. Let’s start a few wars in countries far away!
But isn’t that exactly how economies have improved in the past. Go to war.
you sure it doesn’t have anything to with the fact that all of our competitors were blown to hell and back?
Again I ask you to explain why South America didn’t join us in developing a large, stable middle class during the same period.
Yeah, Fraudlin Deficit Rosevelt and his socialist power grabs and confiscation of gold is exactly what we DON’T need. And by the way, WWII is what pulled us out of the depression, not massive government deficit spending.
Sammy maybe you should read up on WWII and the US deficit.
You say WWII is what pulled us out of the depression, not massive government deficit spending.
WWII
Pumped huge amounts of gov dollars into the economy.
Go to Zfacts.com and take a look at the nationa debt graph in the left column from 1940-1945
If you’re too lazy
National debt increased from 50% of GDP to well over 100% of GDP.
http://mises.org/store/Roosevelt-Myth-with-Raico-Introduction-P91C0.aspx
Measton,
Instead of regurgitating flimsy conventional wisdom about FDR - the person and his policies - trying digging a little deeper and uncovering the real truth about the man.
Yes, Sammy, thank you for finding an unbiased piece of scholarship about FDR.
…and the Communist Party was about to become the largest political party, while high level businessmen were actively plotting a coup d tat and WWII was looking on the horizon and Russians were still sorting out their communist revolution and China was being invaded by Japan and India was seeking independence from Britain by that troublemaker Ghandi.
Every time I hear people complain about FDR, I know that they have no clue about history, only the bits and pieces that support their narrow view.
no clue about history, only the bits and pieces that support their narrow view
There’s a lot of that going around these days, not just about FDR…
I am not sure we can withstand a WW3, but what would be wrong with a GOVT policy that declared WAR on oil, and set about to put solar panels on every roof in America? In 10 years we could be telling the Arabs to keep their black stuff, and in the mean time put millions of people to work. Bigger deficit? In the short term, but in the long term, a vibrant and functional economy.
What we are doing now, is to allow everything to crash and burn then trying to mop up the aftermath…If things keep going, within a few years virtually all small businesses will be gone, and the bigger ones will be on permanent “too big to fail” life support.
“We have tried spending money. We are spending more than we have ever spent before and it does not work … After eight years of this Administration we have just as much unemployment as when we started … And an enormous debt to boot!”
Henry Morgenthau Treasury Secretary under FDR, after 2 terms of FDR’s “New Deal”.
Yeah, but what did he know…and when did he know it ?
As for myself, I can’t wait for 2012. I want some of this easy money. I want change I can hope for. I’ll look for a presidential candidate that despises the citizens, that has a murky history, has no background in business and is only interested in creating massive debt laden programs that directly benefit good ol’ Zeus.
Wait…..
If you want some “easy money” you have to work as a senior banking official. That is where virtually ALL the money has been spent. A total waste! We need something in return! Now is a great time to get real infra-structure programs going while labor is cheap.. Oh I forgot, wait a few years till more people are starving then the deal will be even sweeter!!!
So you’re only for Hope and Change if it’s your kind of Hope and Change.
“So you’re only for Hope and Change if it’s your kind of Hope and Change.”
Wowsville…. I never thought of it like that, so I guess I’m a Democrat!
That puts me in the front of the parasiteline. Way cool…
And Reich was a big supporter of NAFTA and free trade. Nothing like enabling the 1% to take their companies to places of cheap labor.
I suspect that the problem isn’t so much that the rich make foreign investments but that much of the money gets funneled into either equities (which leads to stock market bubbles) or loans, (credit bubbles).
I seem to remember reading something about the post-WWII era… the American worker had to rebuilt the world following some war(s). That might have something to do with the increase in income of the average person.
Oh, and late 1970s, when the richest 1% was at a low, wasn’t the best of times for the average worker either.
I like the author’s thinking, but I believe he left out some important factors in his analysis.
South America and Central America were relatively untouched by the war, and had plenty of commodities to supply the rebuilding world. Why did they not develop wealthy, stable, middle class societies during the same period? Income disparity perhaps?
That’s kind of like saying that you didn’t win first prize because you crossed the finish line tenth. “No real middle class”, “Great income disparity” are simply two different ways of saying the same thing.
OK. They hadn’t instituted the mechanism’s for avoiding income disparity that the US did. (Or those countries that did, had the reforms forcibly removed by right wing coups, etc.) Therefore the resulting income disparity caused them to not develop as rapidly as we did.
It’s not circular reasoning to say that the lack of money going to a potential middle class caused that society to not develop a middle class.
A middle class is not a requirement for prosperity, it is the result of prosperity. That group which is neither predator or prey, it can only flourish in time of abundance. Who moved my Lazy-boy?
A middle class is not a requirement for prosperity, it is
the resultone possible result of prosperity.A middle class is not a requirement for prosperity, it is the result of prosperity.
I’d say the middle-class is not “the” result of prosperity, but rather “a” result of prosperity if enabled and nurtured by policy protections.
The USA has certainly “prospered” statistically the past 30 years while the middle-class has been hammered. It is because those policy protections were abandoned in the name of globalization and “free-market” capitalism.
Well how does one DEFINE prosperity for an entire nation? ‘Cause if the majority of the population ISN’T reasonably prosperous is the nation as a whole really prosperous? If you put Bill Gates in an auditorium with a bunch of homeless guys, most of us wouldn’t call that a room of prosperous people despite the high average wealth.
“”" A middle class is not a requirement for prosperity, it is the result of prosperity.”"”
Prosperity for who?? The elite? Yes the middle class and democracy are not a requirements for the prosperity of the elite, many 3rd world dictatorships have proven this.
“Well how does one DEFINE prosperity for an entire nation?”
If adequate food, shelter, medical care and all the necessities of life are available to anyone who seeks it, such a place is prosperous.
Joey, –of course adequate is a matter of perception and a moving target.
..adequate is a matter of perception..
Since “prosperous” is a matter of perception, i think it’s OK to use words like adequate when defining it.
Then we fail as at least 16% of population cannot do so. And that isn’t counting the temporarily unemployed.
In the richest nation on the planet.
perhaps not.
“What’s more, the rich don’t necessarily invest their earnings and savings in the American economy; they’ll send them anywhere around the world where they’ll summon the highest returns …”
There it is, there’s the root cause.
Money made here flows out of the country and ends up somewhere else.
It’s the FLOW of money that makes an economy work. If the money does not stay in the American economy then it can’t flow in the American economy.
This is true of some of our cities as well. What money that is made in Cleveland and Detroit leaves these cities and finds a home somewhere else. This new home for money prospers while Cleveland and Detroit languish.
“What’s more, the rich don’t necessarily invest their earnings and savings in the American economy; they’ll send them anywhere around the world where they’ll summon the highest returns …”
The key flaw in both trickle down economics and monetarism.
The key flaw in both trickle down economics and monetarism.
It’s not a flaw in anything. It’s the free markets at work.
You want the money to come to you? Then you must provide an incentive for it to stay. High taxes, low return….well, you’re just not making yourself competitive.
The ability of money to cross borders means that governments actually have to be competitive…..and honestly, I’d much rather that be the case.
“Governments actually have to be competitive”
Dictatorships are pretty competitive. Especially when you can keep the wages of the serfs down (by throwing them in the Gulag, or shooting a few who get out of line). Not to mention letting businesses out of having to deal with all those consumer, environmental and worker protection agencies.
Reverting back to a circa 1900 work environment is not my idea of progress.
Governments ARE NOT corporations. They exist SOLEY to serve and protect the population. When they cease doing that, they become tyrannies.
drumminJ- One day perhaps you will learn that the money you make is not earned in a vacuum. It is earned within a society that requires that you repay it a portion of your earnings, so it can continue to offer the same opportunities for you and others to make and enjoy wealth. It’s called the ’social contract’.
If you don’t like society’s getting a cut of your earnings, then you must earn your money outside of society. (I hear Gault’s Gulch is hiring- but they pay Chindian wages.)
There it is….. if you need evidence showing the utter and complete failure of supply side, just look at the past disasterous 30 years.
Trickle down economics = trickle up wealth.
Trickle down poverty.
The problem is identifying cause and effect. Perhaps the rich send their money out of the country BECAUSE of high taxes. If taxes were reduced they would have an incentive to keep their money here.
Presumably even if they are investing abroad they pay taxes here. Your point only makes sense if they are illegally hiding money or if they move to another country.
Perhaps the rich send their money out of the country BECAUSE of high taxes. If taxes were reduced they would have an incentive to keep their money here.
Raise the super-rich parasite’s taxes to their historical norms. Then they’d have less money to send to Brazil.
You never heard of Swiss bank accounts, or Cayman Island bank accounts?
..Raise the super-rich parasite’s taxes…
so it’s a no-brainer .. Take the money from the rich and give it to the poor, equalizing wealth distribution. Thus create a middle-class…??
What is a “middle class”? Is it a class of people that takes money from others who earned it, or is it a class that earns it’s own money and is self-sufficient? It’s the latter, of course.
If you want a middle class, all you need have is jobs available so people can work and support themselves.
Governments that take from the rich and give to the poor instead of creating an economic environment where jobs are available are not doing ANYONE any favors.
DeniisN,
Right, and I think we’re tip toeing around a recent Senator’s yacht purchase from down under? So it was built abroad and then ( for “repairs” presumably ) homeported ‘elsewhere’ to avoid taxation?
It’s still unclear ‘what’ his intentions were, but having it built in shipyard IN Mass. and then MOORING it there would have left no room for doubt. These are problems most of us just don’t have? ( Usually I just ask the neighbor if I can park the old Uniflite there til’ Monday? )
so it’s a no-brainer .. Take the money from the rich and give it to the poor, equalizing wealth distribution. Thus create a middle-class…??
No. Obviously it’s a brainer… Invest it in paying down debt, infrastructure, education, small business, US manufacturing, health-care, job training….
“…..all you need to have is jobs available…..”
You guys just don’ get it. Capital will go wherever it gets the maximum rate of return, if left to it’s own devices.
Very few “rich” people invest in the USA anymore. It’s not that they don’t get a return on investment, it’s just that they believe they can get a higher return somewhere else. Right now, that’s China. A true capitalist is Ammoral, and has no allegiance to anyone or anything other than their bank balances.
Eventually, some African dictator is going to say…..”Invest here….we guarantee a 25% ROI, because all our worker-bees will work for two bucks a day, and if they get hurt or sick, we just put them out on the veldt for the hyenas…..Our raw material costs are low, because we have this army that goes around to our neighboring countries, and takes/steals everything we need…..”
Wall Street will run, not walk, to invest there. Anything other than making a buck is not their problem…
“Governments that take from the rich and give to the poor instead of creating an economic environment where jobs are available are not doing ANYONE any favors.”
+100
“Governments that take from the rich and give to the poor instead of creating an economic environment where jobs are available are not doing ANYONE any favors.”
I agree. But it’s not JUST this. This is in combination with corporations that take from the poor and give to the rich without creating an economic environment where jobs are available who aren’t doing anyone any favors either.
When you create too much income disparity, you create resentment, which leads to unrest. Which leads to governments being overthrown.
X-GSfixr.. Firstly I don’t agree that “very few “rich” people invest in the USA anymore”.
Are we having trouble selling govt bonds? Are American corporations underfunded? Someone is investing heavily in the USA..
Wealthy people certainly do invest in Wall Street and also diversify across the world. The more money one has, the more widely it can be spread around, for safety and opportunity.
High or low returns are balanced by high or low risk. The odds are that the “rich” who invest only in the highest returns won’t be rich for long, or will lose money, because they are taking on the highest risk.
I’d bet that most of the very wealthy search out the LOWEST risk investments. Even with low risk, low return investments, the huge amount of money they can invest means a huge return from a “normal” person’s perspective. In other words, they make it up in volume.
When you create too much income disparity, you create resentment, which leads to unrest. Which leads to governments being overthrown.
For historic cases in point, see:
1. The French Revolution.
2. The Bolshevik Revolution.
3. The rise of Hitler and Nazism, Germany’s invasion of much of the rest of Europe, and World War II
4. The Communist overthrow of the Kuomintang government in China.
You left out the most important one… The American Revolution.
“Governments that take from the rich and give to the poor instead of creating an economic environment where jobs are available are not doing ANYONE any favors.”
I believe that Reich has just illustrated that taking from the rich and giving to the poor (and the middle class), if done wisely, is precisely what creates an economic environment where jobs are available.
When there is great income disparity, there are fewer jobs and less prosperity.
It’s not complicated, and it’s been shown quite often in our history and in other’s.
..When there is great income disparity, there are fewer jobs and less prosperity.
It’s not complicated.
When a bad economy results in mass unemployment, only the wealthy have any money. Nobody hires them so they can’t be fired. If they work at all, they are bosses. They hire people. They have lots of money no matter if the economy tanks or not.
Bad economic times cause job loss, less overall prosperity and naturally, widens income disparity.
————–
This ongoing war is actually between the wealthy and the government.
Reich wants to take the means of production (along with the wealth it generates) away from the private sector and put it in the hands of the government.
Reich’s army is the Left, most of the poor, and a good portion of the disillusioned middle class. Bad economic times are a most fertile ground for marxists.
When a bad economy results in mass unemployment, only the wealthy have any money
Reverse that and you’ve almost got it. When only the wealthy have any money, it results in a bad economy with mass unemployment. This income disparity occurred before the last great depression, and before the current one.
Reich wants to take the means of production (along with the wealth it generates) away from the private sector and put it in the hands of the government.
Are you so rally bad at reading comprehension that you read a call for a return to the tax rates we had in the the post WW2 period, under Republican and Democratic presidents, as a call for the government to seize the means of production?
You’ve out-McCarthied McCarthy.
lol- so rally bad=really so bad
i dunno what’s worse..
Leftist elitists like Reich, along with the true believers who know exactly what they’re doing; The greedy, envious “poor” who selfishly lust after other people’s money under any and all conditions; Labor, who would strangle the very businesses that provide them with jobs even if they strangle themselves at the same time; or uninformed idealists who thoughtlessly parrot Reich’s propaganda and spread his ideology without having the faintest idea what the man’s agenda actually is.
So the solution would be to FORCE them to invest in something with a higher risk/return ratio? Shouldn’t the goal of a Cleveland or Detroit entrepreneur or company to be a good investment because of their hard work and talents, not government selection?
There ya go again, SFC. Injecting logic into the argument.
How quaint……..believing that hard work and talent will mean you will get ahead.
So the solution would be to FORCE them to invest in something with a higher risk/return ratio?
No, the rich are free to invest in whatever they want, after they’ve paid their taxes (which will be much higher than now). The government uses the tax dollars to invest in our own middle class, which has been shown to be the best investment a government can make, if common prosperity is sought.
“So the solution would be to FORCE them to invest …?”
If this is a reply to my post of 06:07 the you might want to give my post a second look. I made no comment at all about forcing anyone to do anything.
Roughly speaking, the distribution of incomes mirrors the distribution of good luck (50%), brains (25%) and willpower (25%).
Since very few ever possess that set of necessities in the right proportions, a small minority will naturally accumulate a disproportionate amount of the wealth.
Roughly speaking, the distribution of incomes mirrors the distribution of good luck (50%), brains (25%) and willpower (25%).
Rather:
Nowadays, roughly speaking, the distribution of wealth mirrors the distribution of who your parents were (50%), your industry’s protection by lobbyists (25%) and regressive tax polices (25%).
Since very few ever possess that set of necessities in the right proportions, a small minority will naturally accumulate a disproportionate amount of the wealth.
Nowadays, roughly speaking, the distribution of wealth mirrors the distribution of who your parents were (50%), your industry’s protection by lobbyists (25%) and regressive tax polices (25%).
Yep. Talent, and hardwork no longer mean squat in this country unless you have “connections.” And even then, connections count for more than talent and hardwork.
Where does a willingness to skirt the bounds of the law enter your breakdown of factors that explain the income distribution?
The middle class, more than any other class, relies upon the law in order to exist. No other class has as large an interest in a fair and just legal system as they do. The rich can buy their own protection and favors, and the poor have little to protect, and little to lose from upheaval.
The existence of a secure, long-term middle class in a country indicates the presence of a fair and consistent rule of law, just like a canary in a coal mine indicates the presence of adequate oxygen.
I didn’t know that was all the % of income the top 1% got. They pay, however, 40.4% of the taxes. The top 50% pay 97% of the taxes.
The top pay maybe 19% of their income in taxes. At least the clever ones do.
Ever heard of tax breaks and deductions? The rich have them in spades. And they go by an entirely different tax code than everyone else.
Shhhh…. quiet eco….. any more facts from you and pismos head will explode.
Yes, I’m taking care of 5 dependents plus myself. I’m not in the top1%. Cut off the earned income credit (Money for welfare queens and illegals). You get a check for not working.
Now why would an average wage earner such as yourself volunteer to raise his own taxes by abolishing the earned income tax credit? It defies your own shaky ideology.
Home Sales Drop 27 Percent in July and Things Are Only Going To Get Worse for The U.S. Housing Industry
To say that the real estate industry is alarmed by these numbers would be a tremendous understatement. What we are seeing unfold is essentially “Armageddon” for those involved in the housing and real estate industries. The real estate market is grinding to a standstill and a shockingly low number of people are actually in the market to buy a home right now
http://www.lewrockwell.com/rep/home-sales-drop.html - 20k -
Promise?
If only their stupid real estate ads would grind to a standstill. Especially Re/MAX’s!
“Especially Re/MAX’s!”
Suddenly the hot air balloon seems like a bad logo.
They should switch to a Lead Zeppelin.
jeff,
Nice find. Too bad they managed to drag the REST of us down ‘with’ them in the process? How great is that?
In spite of popular assertions to the contrary “The last 30 years” “Dating back Reagan” etc. etc. this belongs squarely on the shoulders of NAR. Plain & Simple.
The Savings & Loan disaster was the same way.
But the “last 30 years” is the over-arching cause of both.
Shocking!
Unions gearing up to support Dems in November
By Sam Hananel
Associated Press
Published: Wednesday, Sept. 1, 2010 2:01 p.m. MDT
WASHINGTON — Union leaders said Wednesday they will mobilize millions of members in 26 states with a message about “economic patriotism” as they try to help Democrats hold onto their majority in the House and Senate.
The nation’s largest labor federation plans to spend more than $50 million leading up to the November elections, targeting 70 House races and 18 Senate races with television ads, phone banks and leaflets.
In a response to the anti-establishment anger of Tea Party activists, AFL-CIO president Richard Trumka called on voters to think about “economic patriots” and “corporate traitors.”
http://www.deseretnews.com/article/700062038/Unions-gearing-up-to-support-Dems-in-November.html - 50k
Richard Trumka called on voters to think about “economic patriots” and “corporate traitors.”
I don’t care who this is coming from but this is brilliant. Why? Because it is true.
Why the Tea-Party does not frame the issue in this light yet is because of their movement and minds being hi-jacked.
I guarantee, Fox New’s, Glen Beck’s and Rush Limbaugh’s puppet master’s greatest fear is that the Tea Party will start to frame the issues in the context of economic patriots and corporate traitors.
Oh the horror….. Martha!!! dem dar dam yoonyuns! dayz gunna donate muneez!
If there was someone I’d decided to vote for, but then I saw the AFL-CIO supported them, I probably wouldn’t vote for that person. I doubt I’m alone in that sentiment.
You’re not alone but have no doubt, you’re the minority.
And the difference between winning and losing a national election is usually a couple of percentage points.
Depends on where you live. Have no doubt, he wouldn’t be the minority everywhere.
Correction: angry, screeching minority……. *everywhere*.
If ANY lobbying group endorsed a candidate, I’d think hard about voting for them. I want to elect people the lobbyists universally hate.
Good luck with that.
I suppose World War Two had absolutely nothing to do with getting employment levels up and everyone working. The government just did all of the wealth redistrubution themselves like they are doing today.
What was different about WW2 is the country was behind the sacrifice needed to get the spending going so jobs would be created.
WW2 didn’t CAUSE the spending which led to the jobs: WW2 offered an ACCEPTABLE REASON to SUPPORT the spending which led to job creation.
There was real money raised/borrowed for the war. There was no printing done. Every man, woman and child made sacrifices on every level and contrubuted to the common effort. Unions, corportations, and insurance companies did not gouge society with the common goal of making executives huge bonuses. War bonds were bought with pennies collected by children, trucks came and collected rubber and tin cans everyone was expected to donate to the war effort. The level of efficiency was fantastic. Our leaders today can’t even spell efficiency.
“Every man, woman and child made sacrifices on every level and contributed to the common effort.”
Because there was a political will to do so. We could do the same today IF there was a political will to do so.
It seems we have trouble generating a political will on our own so we need something outside of ourselves to force a political will upon us.
But this time Combo, there is NO MONEY. What are we all going to join together and do, consolidate unpaid bills?
The cooperative will lasted only a couple years then the black market and other cheating kicked in.
As far as incomes, the unions became stronger during WWII, because industry was forced into cooperating with them, if they agreed not to go on strike etc, IIRC. So they came out of the war pretty strong, started striking again and it was a huge mess but workers’ wages went up and up until all the outsourcing began.
Not sure how we get there again.
The unions grew stronger after WWII because you had 16 MILLION combat veterans who WOULD kick your butt (and your army) if you tried to screw them over.
There is a direct correlation between the WWII vets getting older and retiring and the decline of the unions.
Not to mention Victory Gardens. They accounted for something like 40% of American vegetable production during WWII.
My mother’s grandparents had one. And, according to Mom, they kept the family fed quite well.
Pent up demand in overdrive.
There is little commonality among Americans today compared to the late 1930s / early 1940s. The 9/11 incident brought us together for a bit, but then the wars that followed lasted too long, even though GWB said it will be a decades long war in dozens of countries. We lack the cohesive culture to want to treat each other like a sibling.
Redistribution of wealth is merely going to result in more people moving their wealth overseas. Wealthy people don’t want to give away their money to people who have much different values.
Little commonality? What are you talking about? We all watch “Jersey Shore”.
I have yet to see an episode of that crapfest. If I’m careful, I never will.
…and American Idol and Dancing with the Stars!
Move more money offshore? That’s funny. They would have already done so if they could.
There is little commonality among Americans today compared to the late 1930s / early 1940s. The 9/11 incident brought us together for a bit, but then the wars that followed lasted too long,
Americans would have come together much more if we had been told to, asked to and guided to. Instead we were asked and guided to “go shopping”.
In addition to the exhortations to go shopping, we were urged to take trips and hug our children. Not exactly what I’d consider to be nation-unifying things.
I think after 9/11 Bush should have gone on the tube and announced that he was asking Congress to bring back the draft, and for the rest of Americans to have higher taxes to pay for the war. People generally won’t “sacrifice” unless they are asked to, and the case for sacrifice is made.
And as a side benefit it would have put a serious dent in the rap hip market
and those peeps would be to busy in Iraq to talk about them pimpin ho’s and Gucci bags….
and the money would have flowed to real musicians…..
And as a side benefit it would have put a serious dent in the rap hip market
and those peeps would be to busy in Iraq to talk about them pimpin ho’s and Gucci bags….
and the money would have flowed to real musicians…..
We can only wish!
OTOH, I know a veteran of the Vietnam-era Marines. She was an officer, and, to put it politely, she wasn’t very impressed with the quality of the draftees who were sent her way. Said she had to discharge about 90% of them.
And, going further back in history, there was a draft during WWII. However, there were plenty of people who were deemed unfit to serve.
Happened to one of my friends, and, oh, was he disappointed. He really wanted to be in the Army Air Force. Instead of going into the active duty military, he served Stateside in the Red Cross
9-11 was a perfect time to encourage everyone to conserve as much energy as possible, and to start a ‘manhattan project’ concerning renewable energy.
But certain groups in power at that time had a vested interest in that not happening. So we were told to go shopping.
Mine eyes have seen the glory of the end-of-season sale.
So you share the values of the PRC? Or Russia?
As we discussed the other day, tax withholding went in during WWII (IIRC 1943). This enabled the collection of two year’s worth of taxes in a single year: those due from the previous year PLUS the present year. This was an accounting trick - good for one time only - that had the effect of a huge tax increase for one year.
Better than expected fake UE numbers! Hooray!
Were they?
In my area, there they are building a new coke plant for the area steel mill. And the Steel mill’s business is so good, it recalled all 1,000 laid of workers last fall, hired 200 people over the Summer, and is looking to hire 200 more people in the Fall.
A local retailer operation is looking to hire a couple of hundred people for their call center, and more for their distribution center, and expand their warehouse space to another building.
Another company opened a new Distribution center recently.
A new car dealership is getting ready to open, along with a new Tire center about a mile away.
Yes, some economic plans have been put on hold, but there are plenty of signes that companies around here cut too deeply last year, and with business holding up better than expected, they are trying to restaff.
There is still a steel mill in the USA? We need OSHA, EPA, and the rest of the Feds to get on this ASAP to correct this obvious deficiency.
This particular mill is the single largest supplier to the domestic auto industry. So I guess the governmnent bailed it out, in a sense.
There is still a steel mill in the USA? We need OSHA, EPA, and the rest of the Feds to get on this ASAP to correct this obvious deficiency.
Yeah, I guess it turns out all that OSHA, EPA stuff is a load of crap. Steel mills can operate successfully in America.
Only with tax money taken from the unwilling.
Cincydad:
If we paid down peoples credit card debt, people would spend it on neglected repairs…which would be spent locally.
I see construction here in about 6 buildings who added new floors to a 1 story commercial warehouses and retail spaces….now let see it they will rent…
What I’m seeing is that retail expansion, in general, has come to a halt (except the occasional car dealership, tire center, restaurant).
But I’m seeing ditribution centers (there are a fair number in this area) expanding their space under lease and moving product into that space.
And I’m seeing the raw manufacturing companies (steel) expanding production as well.
Whether the future projected volumes come to bear or not remains to be seen.
And as always, the Cincinnati area is somewhat counter-cyclical to the rest of you.
What’s this “we”? How about if people pay down their own credit card debt?
“What’s this “we”? How about if people pay down their own credit card debt?”
+1
No doubt jbunniii. I carry zero credit card debt and owe $4K on a 2008 Subaru. I was $344K in debt 3 years ago and now owe $4K, period. I’ve spent the last 3 years reading this blog and taking the noteworthy lessons to heart and have applied them to my personal life/finances. I now rent.
When I sold my house at a loss in 2007 I brought $18K to the table to close. What a FOOL I am. I bet I could have socked away close to $45K (plus the $18K) playing the “poor me” card and squatting. I really want to kick both a politician and banker in the sack-ola.
This is one reason why things are getting so brown and smelly in the US. EVERYONE wants a friggin bailout. And another reason why I won’t buy until the government starts rewarding those of us who ADD to the community/system and smacking the snot out of those who attempt to game the system (could be a long wait, eh?). Until then I rent & save. Sanity must return at some point & if not, I’m sure as heck not going to join them ever again.
Well WE are paying down deadbeat HoeOwnerz debts….and dumping on the next generation.
How about a little money to peeps who are paying rent on time even if we have to eat ramen?
And maybe a little $$$ to my zydeco bands who play some kick azz real music….click on my handle
———————
What’s this “we”? How about if people pay down their own credit card debt?
There is still a steel mill in the USA? We need hedge fund managers, angry southern republican politicans, and the rest of the corporate kleptocracy to get on this ASAP to correct this obvious deficiency.
Thanks for the “eye on the spot” report Cincydad. Good to hear somewhere is doing well and growing.
I’ve heard some parts of the NW are doing well with gas and oil exploration.
I’m not surprised to learn that this is happening in Ohio, CincyDad. The Buckeye State has a lot going for it. Such as hard-working, courteous people. That counts for a lot.
Does anyone know how low of an offer banks will accept right now for a foreclosure? I’m looking at a house in NE PA where the county courthouse is overwhelmed with foreclosures. I wouldn’t want to offer more than 50 cents on the dollar and that would only be if the house seemed to be in great shape. It is a big house that was built in 1921, so if anything is wrong it could be very costly. Since you buy a foreclosure “as is”, that has to be taken into consideration in the offer along with the fact that prices are still way too high in the area and won’t recover until the debt is flushed from the system and employment picks up. Do you think an offer of 30 cents on the dollar would be accepted? Has anyone had experience buying foreclosures lately or does anyone work for a bank and know what banks are accepting to dump properties?
Thanks for any advice.
There is no rule. Decisions are made by different individuals under different circumstances. Offer only what you would be happy with if they accepted. To put it perspective though, no one has accepted one of my offers yet - usually at least 25% off current asking price.
Thanks for sharing your experience! The Realtor who will be showing us the house said that one of her colleagues just had a bank accept an offer of 30% off on a foreclosure. The bank rejected the offer at first, but then called back a week later to accept. So, hang in there.
We are in no real hurry to buy, so we have time to wait for prices to fall further. We sold our townhouse in 2006 and have been renting since. We have small children and really want to give them the stability of their own home to grow up in; so, if we could get a house for a reasonable price, we’d love to finally buy. But, if we have to keep waiting, so be it.
I am in the same boat. I want to buy, but if they wont accept what I am comfortable with so be it. Never be afraid of insulting others in a business transaction. They should be honored you cared enough to express some interest. Good luck.
Hang in there, girl! Don’t give your money away to undeserving bag holders…
LB may wish to review the “haggling” skit in the film Life of Brian……
I love that scene!
And the one where the adherents of the sandal and the adherents of the fake beard get in a fight. Great depiction of religious schism.
And the centurion correcting the Latin used in the graffiti.
Centurion: What’s this, then? “Romanes eunt domus”? People called Romanes, they go, the house?
Brian: It says, “Romans go home. ”
Centurion: No it doesn’t ! What’s the latin for “Roman”? Come on, come on !
Brian: Er, “Romanus” !
Centurion: Vocative plural of “Romanus” is?
Brian: Er, er, “Romani” !
Centurion: [Writes "Romani" over Brian's graffiti] “Eunt”? What is “eunt”? Conjugate the verb, “to go” !
Brian: Er, “Ire”. Er, “eo”, “is”, “it”, “imus”, “itis”, “eunt”.
Centurion: So, “eunt” is…?
Brian: Third person plural present indicative, “they go”.
Centurion: But, “Romans, go home” is an order. So you must use…?
[He twists Brian's ear]
Brian: Aaagh ! The imperative !
Centurion: Which is…?
Brian: Aaaagh ! Er, er, “i” !
Centurion: How many Romans?
Brian: Aaaaagh ! Plural, plural, er, “ite” !
Centurion: [Writes "ite"] “Domus”? Nominative? “Go home” is motion towards, isn’t it?
Brian: Dative !
[the Centurion holds a sword to his throat]
Brian: Aaagh ! Not the dative, not the dative ! Er, er, accusative, “Domum” !
Centurion: But “Domus” takes the locative, which is…?
Brian: Er, “Domum” !
Centurion: [Writes "Domum"] Understand? Now, write it out a hundred times.
Brian: Yes sir. Thank you, sir. Hail Caesar, sir.
Centurion: Hail Caesar ! And if it’s not done by sunrise, I’ll cut your balls off.
The world just wouldn’t be the same without Monty Python……
Damn that was a great movie!
“Splitter!”
You have to decide what it’s worth to you. That’s all.
Bidding on the court house steps appears to be a very state-specific process. Here in IL, bidding at the court-ordered auction almost always means you are bidding against the bank, who will bid up to the amount of the defaulted loan (which these days is almost always more than the house is worth); I was told by a real estate attorney that they must do that in order to establish their loss. From what I’ve seen, the lowest prices seem to go on REOs. At least around here, banks aren’t taking 50-cent-on-the-dollar bids - yet. I have seen partially built houses sell for significantly under asking, probably because flippers already have too much inventory and completing construction on a house isn’t the kind of project most buyers want to take on.
Be patient!
Thanks Kim and Bill! We haven’t looked seriously for a house for about 4 years since we sold our townhouse. I’ve kept my eye on the market the whole time waiting for prices to drop. Although they’ve come down somewhat, they are still nowhere near pre-bubble levels. One of the houses I was watching just showed up on Trulia as a foreclosure, so we decided to finally go see it. I was hoping that the banks were starting to dump properties since they are overwhelmed with foreclosures. If not, we can wait.
A house that was in obvious foreclosure was sold at auction and I can’t find the records yet - so no idea what the sale price was. They came by the house, cut the grass, fixed the fence, drained the green pool. Then I see that 9 days ago it shows up for sale on Zillow for 315k. It is also being sold ‘as-is’ and a warning that back taxes are due. I’ll be curious how much of a profit the flipper is trying to get.
Another foreclosure on Zillow has dropped their price more than 25% in the past 2 months. That is a fun one to watch, like a limbo game, how LOW will it GO?
“Here in IL, bidding at the court-ordered auction almost always means you are bidding against the bank”
Isn’t that price fixing?
No, because the Bank has every right to bid on the property. They get paid out of the auction price, so they’re paying themselves to keep the property. If they didn’t bid, somebody could bid a buck and if no one else bid, they’d be out the entire loan with no collateral.
Sounds fair to me. Let the market decide!
No, it’s not price fixing. The bank just bids all the way up to the amount owed on the loan because it is in it’s in its best interest to do so (as Kim said — to establish its loss). Once it takes possession of the property, it then puts it on the market to see what it can get for it.
Once it takes possession of the property, it then puts it on the market to see what it can get for it.
Correction:
That’s what is supposed to happen. In reality most homes are not being put on the market and sold because the bank would have to finally recognize the loss. They are doing it here and there for lower priced properties (which don’t show significant dollar losses in aggregate). But anything over $300,000 is, for the most part, not being listed for sale.
Why not? Because they would then have to recognize a much larger dollar loss. That’s bad for earnings, so they won’t do it. And it’s bad for their capital ratios, so the FDIC doesn’t want them to do it.
“The bank just bids all the way up to the amount owed on the loan because it is in it’s in its best interest to do so (as Kim said — to establish its loss).”
Do such ’sales’ enter the MLS the same as if you or I or another householder make an arms-length purchase of a house as an owner-occupied domicile? This would potentially result in massively misleading upward bias in the home sales price index data series produced by NAR, S&P/Case-Shiller, etc, as the MSM interpretation is that these data are representative of what homes are selling for in arms-length transactions between households.
JohnF — I’m well aware that the banks have been holding properties off the market to avoid the losses; however,they are starting to put some on the market. The house that we are going to see in PA is listed for $482K (amount owed on the loan). We currently live in MD and there are also numerous foreclosures on the market that are listed for upward of $700K (again, from searching the real estate records, they appear to be listing them for the amounts owed on the loans).
Prof Bear — I’ve often wondered myself whether these “sales” were being used as comps. If so, they are skewing the prices higher.
So glad to have the HBB back up and running!
Cobaltblue posted this yesterday:
“Are Housing Prices Being “Cooked”?
“I have a very disturbing email that came in this evening. It alleges out-and-out fraudulent reporting of home sales in one of the regional MLS systems. That is, prices paid that are in fact much lower than the “sold” prices reported in the MLS. The person in question claims to have seen over 100 of these in his area. I have copies of two, and it appears, from the evidence that I have, that at least for those two the claim is accurate.”
Cobalt,
I was also wondering if this is happening. This property: http://tinyurl.com/2bjm3k9 was a foreclosure. It took about two years for this to go through the Illinois courts. During that time there was a terrible water leak and part of a ceiling was badly damaged. A flipper bought it “as is” for $210K in April, just days before it was set to go to auction. He fixed the damage, did some renovations and put it back on the market in July for $479,900K. Other homes in the neighborhood are asking $525K - $600K, so this house was destined to be a comp killer. It quickly went under contract.
Here is where it gets interesting: the listing was then pulled just a couple of days later. Now had the sale actually been completed that quickly, it should have shown up on the Recorder of Deeds web site (and soon after on Zillow) at least a month ago. However, as you can see from the link above, it never showed up as sold, and the listing never reappeared.
My theory: the listing agent pulled the pending sale out of the MLS so it would not be used as a comp. In an odd way, I really, really hope my theory is wrong. Caveat emptor, indeed.
link to Cobalt’s source:
www shtfplan com/headline-news/out-and-out-fraudulent-reporting-of-home-sales_09022010
Would the guys who for years have pulled listings for a day so that the time on market was kept low do such a thing?
As I posted yesterday, I hardly find allegations in an anonymous email to be unimpeachable evidence.
Check the tax records. No one would ever intentionally declare a higher-than-actual sale price to the taxman.
They haven’t shown up yet. Cook County only does valuations every three years on a rotating basis.
“It is by the fortune of God that, in this country, we have three benefits: freedom of speech, freedom of thought, and the wisdom never to use either.”
- Mark Twain -
If Stupidity got us into this mess, then why can’t it get us out?
- Will Rogers
The time to save is now. When a dog gets a bone, he doesn’t go out and make a down payment on a bigger bone. He buries the one he’s got.
-Will Rogers
There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest of them have to pee on the electric fence for themselves.
-Will Rogers
“I’m not a member of any organized political party. I’m a Democrat.”
- Will Rogers
Oh where, oh where has my equity gone,
Oh where, oh where could it be?
Economic Report
Sept. 2, 2010, 10:54 a.m. EDT
Pending home sales index climbs 5.2% in July
By Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) — Pending home sales in July rose 5.2% from downwardly revised June levels, the National Association of Realtors reported Thursday, though the indicator shows the market for existing homes is still depressed after the expiration of a key tax benefit.
As the availability of a home buyer tax credit worth as much as $8,000 expired at the end of April, the pending home sales index plunged 29.9% in May and another 2.8% in June. The NAR had initially reported a 2.6% drop for June.
The July index came in better than the 1% monthly drop that economists had forecast, though sales in July were nonetheless 19.1% below those during the same month in 2009.
The data reflects contracts and not closings, which normally occur with a lag time of one or two months. The NAR index is based on a large national sample, typically representing about 20% of transactions for existing-home sales.
The May plunge in pending home sales hinted at the 27.2% plunge in existing-home sales reported in July.
“Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” said Lawerence Yun, chief economist for the trade group.
“For those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity.”
…
I hate how the NARds always ignore inflation and loss of opportunity while touting the ‘investment’ in real estate. If you invest 100 bucks, and in 10-15 years, you have 100 bucks, you did not make a very good investment.
But on Wall St, if you invest 100 buck and you lose 100 buck, as far as they’re concerned, you made a great investment!
Read the handwriting on the wall for the end of the first-time homebuyer tax credit.
Study: Cash For Clunkers Was A Wash
Categories: Government
04:00 am
September 3, 2010
by David Kestenbaum
The government’s “cash for clunkers” program boosted auto sales by 360,000 during the two months it was in place, according to a new study.
But in the seven months that followed, sales were down by 360,000 compared to what they would have been without the program, the study found.
The implication: The program didn’t bring new buyers into the market. But it encouraged people who would have bought a car anyway to make their purchase a few months sooner.
…
And by the holidays a big chunk of them will be repo’ed
Its will be hard for the peeps to pay a monthly cost plus have full coverage insurance …
they will want the good old days back ..a paid off car and cheap insurance..
Proof that we have absolutely no need for 90 percent of our government. Its a wash. Costs every bit as much as it helps. Its like trying to fix a leaking bowl by saying we need a bigger bowl with more holes in it.
Actually it cost $3 billion. For absolutely zero net gain in sales. Let’s see, $3 billion divided by zero = infinity per car. Must be a really nice car.
You do know that majority of government is now private contractors, right?
Now that’s a shocker, a government program that didn’t do what it was designed to do. But it did prop up the prices for a short period of time [and help me sell my house].
Wonder what they’re planning next?
Oh yeah, we have an election this fall. They’re be busy trying to figure out how to get re-elected.
Lip,
Lol, probably right, as I’ve said before these are the consequences of “pulling sales forward”. But the truth is, it DID buy (2) mos. worth of sales at a time when they were sorely needed. I mean, we survived to talk about it?
Yeah, and now we get to hear about how wonderful they all are and how their opponents “don’t know crap”. We will survive all of this, at least we have a good pennant race to watch.
Go Sox Go. I’d like to see Manny go on a tear this weekend in Boston but I fear he’s just going to act up and do something stupid.
Wait, Manny is a politician?
Manny is the most talented player in the game, but he is unmotivated to perform. Such a waste.
I’ve wondered about the whole “deficit/debt spending” angle.
Isn’t all it does is pull demand forward? The theory is that in a downtime, that government spending can keep economic activity high, and eventually the consumer increases his economic activity, allowing the government to back off.
But when government then has to pay down its debt, doesn’t that lower economic activity?
If the target level of activity is massive government deficit spending, plus massive consumer debt-based spending, won’t that eventually have to be paid off eventually?
Doesn’t deficit spending merely draw demand forward, leading to a contraction in the future?
You’ve found the problem with the way we run government. They do the stimulous spending, but in boom times when it might be GOOD to cool things down a little, they don’t start paying down. AT BEST they tread water and say to themselves “Debt doesn’t matter, cause our GDP will keep going up making it easier to eventually pay back the debt without having to make cuts.”
They don’t pay it down because that means cutting projects and programs that directly benefit their cronies.
Most important part of this news: It weakens the case in favor of QE2.
Rise in US private sector jobs raises hope
By Alan Rappeport in New York
Published: September 3 2010 13:59 | Last updated: September 3 2010 14:43
The US shed 54,000 jobs in August as the government dismissed more temporary census workers, but a rise in private sector employment offered hope that the economy could fend off a second recession.
August was the third month running that the US shed jobs, however revisions to the prior two months showed that the losses were not as severe as previously thought. Last month, the US unemployment rate ticked up to 9.6 per cent from 9.5 per cent in July, as the size of the labour force grew.
Labour department figures showed on Friday that the US managed to add 67,000 workers in the private sector, stronger than the 40,000 that Wall Street analysts had predicted. Economists expected a drop in non-farm payrolls resulting from the drop-off in census employment, predicting a decline of 105,000 workers from July to August.
Investors were heartened by the better-than-expected data. S&P 500 futures, which were flat before the release, rose 1 per cent to 1,100.90. The yield on 10-year US Treasuries rose 12 basis points to 2.74 per cent. The dollar rose 1 per cent versus the yen to 85.09.
“This report makes it unlikely that the Fed will implement new monetary stimulus measures at the September FOMC meeting,” said David Greenlaw, economist at Morgan Stanley. “But, such action remains a possibility at some point during the next several months if the incoming data suggest that the underlying pace of economic growth is slipping.”
…
That isn’t much of an increase, frankly.
I want to see growth that exceeds the margin of error of the survey.
No chance. They will have their QE2 and eat it too.
WHOO HOO! Only 15 million more to go!
Remember when LV was THE place to move to? Along with 30% per year increases in housing prices…
All signs point to continuing Las Vegas exodus
Las Vegas Sun - September 3, 2010
With emerging signs of economic recovery across the country, a slow but steady stream of Las Vegans is moving away in search of better luck, in stark contrast to the unprecedented influx of residents during the region’s boom years.
“People are moving out more than usual,” said Sherry Clark, a sales representative for the moving company Allstate Moving in Las Vegas.
Among U-Haul rentals, more are heading out of town than arriving, by a 2 percent margin, said Joanne Fried, U-Haul International director of media and public relations. And outward traffic is slightly higher this year compared with 2009.
Mayflower Transit and United Van Lines moving companies have reported decreases in incoming and outgoing traffic for Clark County since 2007, but the number of people moving to the valley has plummeted more than the number leaving.
Among those leaving is a 30-year-old plumber and mechanic who swayed his 2-year-old daughter in his arms, trying to keep her entertained while awaiting the keys for a 17-foot U-Haul truck he would drive from Henderson to Reno. After 10 years of trying in vain to find a steady job, he is giving up on Las Vegas.
“You can’t find work here,” he said, declining to give his name.
Will the last person leaving Las Vegas please don’t turn off the lights?
I recall reading some years ago about how valet car attendants at the “nicer” casinos were making good money (like 60K, of which a big chunk was tips) and recall how Vegas was supposed the be the new promised land. IIRC, this was 5+ years ago.
Is “Las Vegans” really the title for inhabitants of Las Vegas? Sounds like they all abstain from eating meat or something.
Any analysis I do for Las Vegas shows there’s not much economic base there.
Agriculture - no
Forestry - no
Mining - maybe
Manufacturing - no
Technology - no
Energy - no
Oil and gas - no
Transportation - no
Medicine - no
Government - no
Tourism/entertainment - yes
The tourisim thing is way down. They blame it on the recession. My theory is they tore down or gutted all the old casino’s and made them all look and feel the same.
Just very boring. All those funky old casinos were famous and interesting to visit. So they blew them up. So why would I got to Vegas? Good question.
You could say the same with NASCAR. They had a good thing going and then decided to quit racing on Rockingham and other race tracks. They demphasised their southern roots and then deemphasised the “stock” part of stock car. So whats left is drivers we never heard of racing around in the “car of tomorrow”. And something called a “restrictor” plate.
But I digress.
I’ve never been to LV. Having a degree in math I am predisposed to avoid casino gambling. But you have a point that the old gangster-funded casinos had some sort of tawdry appeal. Now the new ones look like “Disneyland” with the same antiseptic facade. Ugh.
They definitely took a cue from Disneyland, they even installed a monorail.
“So why would I got to Vegas?”
Why go all the way to Vegas to lose money when you can enjoy gambling on the stock market from the comfort of your own home?
Plus you can’ write it off. Goodie, and goodie goodie.
“Government - no”
Actually, Nellis AFB and the numerous “black” sites to the north are major employers in LV.
I was thinking of state government, which is up in Carson City. But maybe I should have added a line for “defense”. Along with “nuclear waste dump”.
Mining - Yes Gold Diggers
He’s leaving Las Vegas for Reno and expecting an improvement?
Yeah I thought that was strange too.
He’s got to have SOME place to gamble away the little he does earn. Otherwise he’d have to do things like buy his kid food and see to their education.
sfbb,
( funny ) I didn’t catch that at first. Sad, some of those ppl become nothing more than indentured servants. You guys ever heard of the Magna Carta or nothin’..?
Actually the Magna Carta was a contract between the King, the Nobles, and the Clergy on how they were going to screw the peasants and divide the spoils.
Psst… unless you are independently wealthy, you’re an indentured servant as well.
Spent some time talking to a jeweler in Carmel. He said that he knows the government is lying just because of the amount of gold and silver people are bringing into his shop for sale. One month $5000, the next $10000, followed by $20000 and this month so far $25000 plus. He has to make house calls for the elderly and says all are in need of money.
On one hand, government is trotting out all kinds of programs to stimulate the purchase of big ticket items like cars and houses.
While at the same time, pursuing/supporting policies that either drive J6P’s paycheck down, eliminate it altogether, tax more of his income, and trash his backup plans (pensions, savings, 401Ks)…….making it financially suicidal to purchase the very same big ticket items.
For J6P to feel comfortable spending more, he’s either going to need an increase in income, or job security, or preferably both. As long as we have “free trade”, that isn’t happening.
Our Wall Street brethern thought 40-1 leverage, MBS, and letting them police themselves were all good ideas. They also think “globalization” and “Free Trade” are good ideas, too. And for them, they have been.
For everyone else? Not so much. Maybe it’s some time for some more critical analysis.
Well, Ron, I would hardly call Carmel-by-the-sea representative of the country at large, given that their average house price is a million bucks. I would guess that they took on mortgage debt five years ago to put Buffy and Muffy through Stanford and are now having trouble paying it off.
Carmel-by-the-Sea is old money; think “paid in full” since the seventies, and enjoying prop-13’s benefits. Their problem right now is that “safe money” isn’t yielding anything, and most well to do folks don’t have productive skills. The trick is riding-out this downturn without eating into the nest egg too deeply. The wealthy know down deep that compassion is the business-end of a sharp sword.
http://www.washingtonpost.com/wp-dyn/content/article/2010/09/01/AR2010090106148.html?nav=rss_opinion/columns
Even MSM journalists are starting to express open disdain for the abject cluelessness of Obama’s so-called economic advisors. Christine Romer appears to have finally percieved the full magnitude of her mind-boggling incompetence. Much like a ship sailing from a sinking rat, Romer is fleeing back to academia (Bezerkly, to be precise). The relief I feel at her ignoble departure is tempered by the fact that this Administration will replace her with an equally incompetent but politically correct ideologue.
“She had no idea how bad the economic collapse would be. She still doesn’t understand exactly why it was so bad. The response to the collapse was inadequate. And she doesn’t have much of an idea about how to fix things.
What she did have was a binder full of scary descriptions and warnings, offered with a perma-smile and singsong delivery: “Terrible recession. . . . Incredibly searing. . . . Dramatically below trend. . . . Suffering terribly. . . . Risk of making high unemployment permanent. . . . Economic nightmare.”
Anybody want dessert?
At week’s end, Romer will leave the council chairmanship after what surely has been the most dismal tenure anybody in that post has had: a loss of nearly 4 million jobs in a year and a half. That’s not Romer’s fault; the financial collapse occurred before she, and Obama, took office. But she was the president’s top economist during a time when the administration consistently underestimated the depth of the economy’s troubles - miscalculations that have caused Americans to lose faith in the president and the Democrats.”
“That’s not Romer’s fault; the financial collapse occurred before she, and Obama, took office.”
Agree that it is lame to blame those serving in office during the fallout from economic crises which were set in stone before their tenure began.
Clinton in ‘97 had an oportunity to control Derivitives. There you go again.
Clinton in ‘97 had an oportunity to control Derivitives. There you go again.
Maybe Pres. Clinton was like a 1960’s-70’s Republican.
Maybe today’s Republicans are like an 1850’s Democrat
In fairness to Obama, his predecessor was a towering mediocrity who botched everything he touched and let his neo-con handlers talk him into the costliest strategic blunder in U.S. history.
And Bush’s economic team makes Obama’s look like towering intellects by comparison.
Want details? Read Matt Lattimer’s book, Speech-Less. He was a White House speechwriter during the previous administration. He has a lot of not-so-nice things to say about the economic team under GW Bush.
Even MSM journalists are starting to express open disdain for the abject cluelessness of Obama’s so-called economic advisors.
Damn shame they couldn’t do that 6 years ago.
* San Diego news, analysis and conversation.
Report: Three in 10 San Diego Households Can’t Make Ends Meet
Posted: Thursday, September 2, 2010 4:59 pm | Updated: 5:18 pm, Thu Sep 2, 2010.
The Center on Policy Initiatives has released new numbers on San Diego County residents struggling to earn enough to cover the basic cost of living.
Three out of 10 San Diego households don’t earn enough to cover those living expenses, even though more than half of those homes have at least one full-time worker, according to the study released today.
That’s 229,195 households that can’t make ends meet.
“That’s a tremendous number,” said Jason Everitt, an analyst for the left-leaning think tank. The center has calculated the cost of basic living in San Diego in the past, but today’s study was the first time it has quantified the number of households earning less than that amount.
“We’ve always known San Diego is expensive, but we didn’t know how many people couldn’t afford to live here,” he said. “Those people are doing things like selling off their property just to make it.”
…
““We’ve always known San Diego is expensive, but we didn’t know how many people couldn’t afford to live here,” he said. “Those people are doing things like selling off their property just to make it.””
What about the sunshine dollars?
We live in the nicest 3rd world country, ever!
This is from TIME!!!
How Barack Obama Became Mr. Unpopular
time.com | September 2, 2010 | Michael Scherer
The Barack Obama that most Hoosiers remember voting for can still be found on YouTube. He stands before a cheering Elkhart high school gymnasium in August 2008, tireless, aspirational, promising a new America of jobs and hope. “We can choose another future,” says the newcomer with the funny name. “So I ask you to join me.”
Today that view of Obama is harder to find in Indiana. A couple of weeks back and a dozen miles west of Elkhart, hundreds gathered in another school gym — except this time it was for a job fair. With the local unemployment rate above 12% and rising again this summer, about a third of the employer display tables stood empty. Julie Griffin, who voted for Obama in ‘08, sat down at the room’s edge, well dressed and discouraged. After 23 years as a payroll administrator at a local RV plant, she got laid off 18 months ago. “Really, what has he been doing?” she said when I asked about Obama’s efforts to help people like her. “I guess I don’t know what he is doing.”
(See TIME’s 2008 Person of the Year: Barack Obama.)
Across the gym floor, Joe Donnelly, Elkhart’s pro-life, pro-gun Democratic Congressman, worked the crowd. He was part of the moderate wave that won Congress for Nancy Pelosi in ‘06, and he was re-elected with 67% of the vote while campaigning for Obama in ‘08. The President has since returned to the region three times, but Donnelly is nonetheless fighting for his political life. In a recent television ad, an unflattering photo of Obama and Pelosi flashes while Donnelly condemns “the Washington crowd.” This is basically a Democratic campaign slogan now: Don’t blame me for Obama and Pelosi. “I’m not one of them,” Donnelly told me when I caught up with him. “I’m one of us.”
Donnelly is my congresscritter. His district — Indiana 2 — is one of the few that hasn’t been gerrymandered to guarantee one party’s dominance. Basically it splits down the middle between D and R. He won easily in ‘08 because his opponent was disliked even by Republicans, not because of any dramatic lurch to the left in IN-2. Elkhart County, which forms part of the district, had the dubious honor of having the highest unemployment in the country during the first quarter of ‘09 and while there has been some improvement since those days, prosperity still seems a long way off.
His opponent this year is a Sarah Palin wannabe who actively courts the tea party crowd and she is likely going to get some significant funding from the RNC. He has to distance himself from the national party, or he’ll be a goner in two months.
Perhaps my optimism is ill-founded, but I am hoping coastal California all-cash investor purchases may dwindle once China’s real estate bubble collapses. Let’s compare notes on this conjecture come 2015.
Home Prices in China to Decline Starting From September, BNP Paribas Says
By Bloomberg News - Sep 2, 2010 6:09 PM PT
China’s home prices will decline from this month as the government maintains its lending curbs and increases the supply of public housing, forcing property developers to cut prices to boost sales, BNP Paribas said.
“Although the government has not quantified its target, it has indicated that it wants to see a housing-price correction take place in order to meet or partly meet public expectations,” Chen Xingdong and Isaac Meng, Beijing-based analysts at BNP Paribas, said in a report today, without giving a forecast for how much prices may drop. “We expect a housing price correction to take place from September onwards.”
The central government intensified a crackdown on real- estate speculation after property prices surged by a record in April. Besides raising minimum mortgage rates and down-payment ratios for some home purchases, the authorities have pledged to boost land supply and the construction of low-cost public homes. Property prices in 70 major cities climbed 10.3 percent from a year earlier in July, according to the statistics bureau.
China’s property developers, the worst-performing group on the benchmark Shanghai Composite Index this year, will “continue to be affected” as the government maintains its curbs on the industry, the BNP analysts said.
The China Banking Regulatory Commission will strictly enforce property policies and work to curb real-estate speculation, the Shanghai Securities News reported Sept. 1, citing Ye Yangfei, deputy head of the regulator’s statistics department.
‘Very Big Bubble’
The property market is in a “very big bubble” that may last until the government increases interest rates and introduces a real-estate tax to curb prices, StarRock Investment Management’s investment director Jiang Hui said yesterday in Shanghai.
…
You want to limit prices, reduce risk and prevent a financial crisis based on bad debt? Then you make sure lenders bear all the repayment risk. When lenders actually have to be concerned about getting paid back, they are much more careful about loaning their money.
It’s just. That. Simple.
No need for complex tax codes, unusual regulatory twists. But… I suspect there are lots of people getting very wealthy from bad loans in China. And hence an unwillingness to deal with the core problem.
“It’s just. That. Simple.”
But wouldn’t your remedy stop the flow of money to people who are getting very wealthy from bad loans? Now with the move for the government to guarantee almost all U.S. mortgage lending, the sure thing investments are set to get all the surer.
This gift has been purchased by the Housing, Debt and Investment Complex, from the politicians.
This will keep demand high, interest rates low, and further entrench securitization and its perverse incentive to create as many loans as possible, regardless of their quality.
Instead of economically sound principles - having the market determine prices, forcing lenders to bear repayment risk - the government moves further towards central planning.
When lenders actually have to be concerned about getting paid back, they are much more careful about loaning their money.
There’s the answer.
But wouldn’t your remedy stop the flow of money to people who are getting very wealthy from bad loans?
And there’s the problem.
Any action which serves to separate lenders from repayment risk sows the seeds of the next major debt crisis. As we have seen, these crises involve a few people becoming very wealthy, and the taxpayer being looted. And our political system has the taxpayer running from the arms of one looter to the other. John Boehner versus Nancy Pelosi - what a miserable set of choices to lead the House of Representatives.
This country is going to continue its slow decline until things get so bad that real political reform occurs, in the sense that we get choices that are not owned by the plutocrats.
Surge in mortgage defaulters in South
By Charlie Weston
Thursday, 2 September 2010
A sharp rise in the number of families in the Republic unable to repay their mortgages is being viewed as a sign the mortgage crisis is worsening.
‘MORTGAGE misery’ has become a constant alliterative phrase in the lexicon of the business or consumer journalist over the last few years. And it’s unlikely the phrase will vanish from frequent usage in the near future. Despite the occasional sign of life in the economy, whether the UK’s or the Republic’s, having a roof over one’s head of one’s own is a fraught business.
And it’s both getting a home in the first place and keeping it that are difficult. Lending criteria are as tight as ever with deposits of at least 25% of purchase price the norm. That can take a long time to save for. It’s not so difficult if you’re buying at the lower end of the market, but for couples wanting to start off life together in a decent-sized house, it can be next to impossible to secure a mortgage.
Of course we could become a nation of permanent tenants and emulate our sophisticated continental cousins, for whom renting on long tenancy agreements is the norm rather than something to be faintly embarrassed about beyond a certain age, but the ideal of owning a home is ingrained in the Irish psyche, north and south.
…
As of last summer, housing was ridiculously expensive in Ireland. Applying the standard 3X annual income test would’ve meant that every home purchaser earned at least 100,000 euros becuase I never saw house advertised for less than 300K
‘Recovery Summer’ Ends With Economic Pothole
by Scott Horsley
September 3, 2010
Whatever happened to recovery summer?
This was supposed to be the season the economy heated up, thanks to a wave of public works projects, funded by the government’s stimulus program. But summer is coming to an end, and the recovery has not taken root. Forecasters are expecting another gloomy employment report on Friday.
And before long, stimulus dollars will be fading like autumn leaves.
…
“fading like autumn leaves”
Yes.., almost a poetic ‘ring’ about it don’t you think? Wait a minute, we’re talking about MONEY here right!?
Why the argument over ‘too big to fail’ could be too big to lose
Ben Bernanke, chairman of the Federal Reserve, yesterday told us what he thinks is the most important lesson to learn from the financial crisis. Drum roll. And the answer is?
By Damian Reece, Head of Business
Published: 6:15AM BST 03 Sep 2010
…
The Fed chair
Grew a pair
And gave those banksters
Quite a scare.
I don’t suppose Bill Gross has a stake in this proposal?
Fed Officials Push FDIC-Like Backstop for ABS Markets
American Banker | Monday, August 23, 2010
By Donna Borak
WASHINGTON — While the call for the creation of a catastrophic insurance fund for mortgage-backed securities has been gaining ground in recent weeks, two leading Federal Reserve Board economists are poised to push the concept one step further, suggesting a backstop for all asset-backed securities.
According to an unpublished paper provided to American Banker, the central bank officials are proposing to create a deposit insurance-like system for the secondary market. The economists — Wayne Passmore and Diana Hancock, the associate director and deputy associate director, respectively, in the division of research and statistics at the Fed — argue that an explicit backstop of certain asset-backed securities could ensure the stability of the system in future financial crises and help eliminate the concept of “too big to fail” institutions.
“People who hold mortgage-backed securities or asset-backed securities are happy as long as they know there is no credit risk,” Hancock said in a recent interview. “When they’re really concerned that there is credit risk, they may run. That’s not good for a securitization market.”
…
“People who hold mortgage-backed securities or asset-backed securities are happy as long as they know there is no credit risk,” Hancock said in a recent interview. “When they’re really concerned that there is credit risk, they may run. That’s not good for a securitization market.”
I disagree. It’s GREAT for the securitization market. If you allow people to be reimbursed for buying turd sandwiches, you incentivise people to create turd sandwiches.
And who gets these turd sandwiches afterwards? The taxpayers. And I, for one, and tired of being forced to take a bite.
This appears to me like another cleverly designed financial engineering scam to use ‘insurance’ as a smoke screen for hot-wiring a flow of money from the U.S. Treasury into the hands of super-rich investors behind the curtain.
Ya think?
Read Thomas Sowell’s book “The Housing Boom and Bust” to get the unvarnished story on the pernicious effects of GSE-supported affordable housing policy. One of many great things about Sowell: Nobody can play the race card against him.
* BUSINESS
* SEPTEMBER 3, 2010
Regulator Issues Rules On Purchases Of Mortgages
By NICK TIMIRAOS
The federal regulator of Fannie Mae and Freddie Mac issued final rules that will bar the mortgage-finance giants from purchasing mortgage-backed securities to meet affordable-housing goals.
The rules are part of a broader revamp of the companies’ affordable-housing mandates that were proposed earlier this year by the Federal Housing Finance Agency. The revamp aims to give the companies greater flexibility in satisfying government mandates to serve low-income homeowners without taking on additional risks.
But the FHFA said that the companies can no longer receive affordable-housing credit by purchasing securities backed by commercial and residential mortgages. The FHFA rejected Freddie Mac’s appeal to preserve the option as long as the company conducted “substantial due diligence” on the underlying mortgage collateral.
The FHFA said that it didn’t intend for the companies to undertake “economically adverse or high-risk activities in support” of the affordable-housing goals.
Over the past two decades, government regulators steadily increased targets that require Freddie and Fannie to purchase a certain share of loans from low- and middle-income borrowers and in underserved markets. The new goals still require the companies, which are operating under government control, to target a certain amount of their loan purchases. But FHFA will adjust the rules depending on market conditions.
The new rules are designed to give Fannie Mae and Freddie Mac greater flexibility in satisfying government mandates.
In the past, one way the companies satisfied those goals was by boosting their purchases of the top-rated tranches of securities backed by subprime and other riskier loans that had been bundled and securitized by Wall Street. The companies also bought commercial mortgage-backed securities to meet goals to finance affordable multifamily housing units.
The affordable-housing goals are at the center of a heated debate over what hastened the downfall of the companies, which were taken over by the government two years ago. Critics say the government mandates at worst encouraged the companies to loosen their standards to meet the goals and at best gave them greater cover to engage in riskier lending to boost profits.
…
It’s painfully obvious that attempts to fulfill their mandate have failed, as housing is unaffordable to poor people. They need an entirely new tact if they actually want to do it.
Here’s my suggestion for helping poor people get into houses.
1) 20% down minimum, and only 15 or 30 year fixed loans from Freddie/Fannie/ and FHA. Maximum loan amount is 2x the median income of the county the house is in.
2) Institute a tax-free savings account people who make under the median salary for the county can qualify for. It makes returns benchmarked to the 10 year treasury or something like that and accrues tax free. If used to buy a house, it isn’t taxed on withdrawal, otherwise its taxed at the regular amount. There can also be an interest penalty for not using it for a house making the return .5% or something ridiculously low to keep people from gaming the system.
So, you’re poor and want to buy a house? You set up the savings account and start socking money away. When you have 20%, you buy the house.
Even simpler would be to revise the tax rules to disallow as “income” any dividend or interest not exceeding the rate of inflation. Same with cap gains over the years.
DennisN,
Interesting wrinkle? Never thought of it that way before. And then stand around and wonder why we’re still poor? If your Div. doesn’t even break CPI ( have you really ‘made’ any money? )
Tell us more my friend.
As with most programs for the poor the real beneficiaries are the rich.
The GSE’s enriched Wall Street and Bankers.
I suspect that if you took all the money lost by taxpayers and investors on this boondoggle one could purchase a home for every poor person in America.
“As with most programs for the poor the real beneficiaries are the rich.”
Bingo! We have a winner, folks!!!
Could this be a nascent housing bubble built on sound fundamentals? It’s different here?
Mortgages fuel Brazilian housing boom
By Paulo Cabral, BBC 9/2/10
http://www.bbc.co.uk/news/business-11165640
It’s great to be working with real estate in Brazil at the moment,”
Cocktail parties, with dozens of real state agents pitching their best offers, have become frequent events in big Brazilian cities in recent months.
It has all come about because of a sharp drop in mortgage rates,
Before then, the Brazilian mortgage market had been embryonic at best as interest rates in the country have historically been among the highest in the world.
In recent months, a particularly healthy mortgage market has emerged. Mortgage lending rose to a whopping 23.8bn reais ($13.6bn; £8.9bn) during the first half of this year, a 77% rise when compared with the same period a year ago.
The rise in demand has resulted in a doubling in the price per square meter in Sao Paulo,
Such explosive price growth is causing concerns, with some industry players worrying about a possible property bubble bursting with all the resulting pain on the rest of society, such as the banking crisis seen in the US and Europe or the property surplus seen in Spain.
“We must not make the same mistakes as the United States and Spain did.”
Developers in Brazil insist banking regulations here are much tighter than they were in the US and say the debt burden here is not as large.
“Here in Brazil, the average loan to value is 60%,” …”In the United States it could reach up to 120% or 130%.”
Some in the industry also say properties in Brazil are bought as homes rather than as investments.
“In Brazil there are eight million families who do not have a house to live in,” says Mr Crestana.
“That means 30 million people, equivalent to the whole population of Argentina, do not have a house.
“So on the demand side we have nothing to worry about for the next 15 years at least,” he insists, pointing to how economic growth in Brazil has elevated some 30 million people into the country’s “lower middle class”.
“And now they want their own homes,”
“Had it not been for the economic growth and the government programmes, it would have taken me much longer to buy my own house,” says Mrs Duarens, whose daughters Juliana, 21, and 19-year-old Tiago still live at home.
“We all have jobs here,” says Mrs Duarens, and so with their four salaries the family is able to pay 1,000 reais per month on their 20-year mortgage.
In the past, they used to pay 650 reais rent per month, so costs have certainly risen sharply, but their old place was much smaller and the rent money was lost forever, she reasons.
“Paying rent is horrible,” she says. “It seems as if you are giving your money away and getting nothing concrete in return.”
Owning their own home gives the family a “strong base to plan for a better future”,
Ah, the Brazilian dream!
Mortgages fuel Brazilian housing boom
Related to this story, here’s a video of that Brazilian, lower middle-class, middle aged family, buying their first house and what it means to them.
http://www.bbc.co.uk/news/business-11157714
If the boom has a lot of “innovative financial products”, then it’s probably going to end badly (but not for the executives of the companies peddling the products).
“That means 30 million people, equivalent to the whole population of Argentina, do not have a house.”
Yeah, but how many of these people are Yamamano?
“It seems as if you are giving your money away and getting nothing concrete in return.”
How does that horrible feeling compare to that of a 30% home equity loss on a $500,000 housing purchase? I would think most folks could afford to throw away several years’ worth of rent on comparable housing before they had thrown away $200,000 (30% of $500,000).
My experience trying to buy a short sale in a bubble area…
House last sold in 2005 for $510K. We offer $290K (too much, I know). Seller accepts offer. Wait, wait, wait. Bank finally comes back after 5 weeks and counter offers at $316K. We counter with $260K - based on the county’s latest property tax asessment, completed after we made first offer. Bank counters again with $310, and demand we pay for termite remediation. We tell them to shove it. House re-lists on MLS for $336K.
Why rush things..
At some point within the next few years, banks will be satisfied virtually giving away the millions of properties they’ve accumulated to anybody who has a little cash to spare, and who wants to accept the burden of property ownership..
Who are the banks going to “give” these properties to?
Who could possibly have the “cash” necessary to absorb all of these homes?
Who would want to do all of this and not expect a decent return on their investment?
Oh yeah! The Federal Reserve……
I might be willing to absorb a house, of the right specifications. I am about five months without one though and my enthusiasm for house absorption is waning.
Given all the housing market shenanigans in plain sight, my enthusiasm is dead.
I’ve had this happen too-
QUESTION:
Why does the “Seller accept offer”????
The seller is not a part of the SS transaction - right???
You are negociating with the BANK, not the “Sellers”
The “sellers” have no power in this situation- why negociate with the power-less
Hell, negociate with their Dog, he has the same amount of power!!
Its a legal thing. The sellers still hold the deed. The banks hold a lein.
Technically the buyer isn’t negotiating with the bank, the seller is asking the bank to take less to clear the lein (and thus clear the title for the sale).
I always get a kick out of reading the NY Times articles “What you get for $X” in selected housing markets.
Today’s is what you get for $275K in Philadelphia, Nashville, and Madison.
What caught my eye was the property tax on that Philly condo: $785. That seems small for a downtown condo. Does anyone know about PA property taxes? Do they bill the HOA for the land and commons areas?
That tax works out to .28% of value.
http://www.nytimes.com/2010/08/31/greathomesanddestinations/01gh-what.html?_r=1&hpw
Philly was giving tax breaks for new houses/condos for the first 10 years (with some restrictions) of occupation. It was their way of getting people to move back to the city. The taxes will double or triple when the ten years is up.
(Thanks to whom ever posted this last night.It deserved a forward.)
Governments, community groups to get first crack at foreclosed homes
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 5:48 p.m. Wednesday, Sept. 1, 2010
Cash investors hunting for abandoned and foreclosed properties will take a back seat to buyers using federal housing money under an “unprecedented” agreement with the nation’s largest private lenders.
The “First Look” program, announced Wednesday, gives local governments and community groups using Neighborhood Stabilization money the first crack at buying bank-owned homes in areas hit hard by the real estate crash.
While plans to spend stabilization money differ among organizations, the general intent of the nearly $6 billion awarded nationwide is to refurbish and eventually sell or rent the homes to low- to middle-income families.
Palm Beach County has received about $77.7 million in stabilization money over two rounds of funding. The City of West Palm Beach, Boynton Beach, and Lake Worth’s Community Redevelopment Agency have also received funding.
But spending the money isn’t always easy. Competition with speculators looking to rent or flip for a profit has made finding viable homes a challenge.
The program, which a U.S. Housing and Urban Development statement called “unprecedented,” also includes a new web-based mapping tool to help groups easily identify bank-owned homes.
“The properties are few and far between right now,” said Michael McManaman, who oversees the neighborhood stabilization money for the Lake Worth CRA.
The CRA received $23.2 million in a second round of funding announced in January. Since then, it has been able to purchase 17 properties in a small area west of Dixie Highway.
But McManaman said he relies partly on code enforcement officers to tip him off when a property might be in foreclosure, as well as real estate agents and combing through bank-owned listings.
Then there’s the investors.
Assistant Palm Beach County Administrator Shannon LaRocque said officials had to work hard to meet a Sept. 4 deadline to match $12.8 million in stabilization money with homes. Part of the county’s program offers loans to eligible buyers, but the buyers have to find foreclosed houses first.
“We knew there was going to be a foreclosure wave and we started to see more properties but they would be gone immediately,” LaRocque said.
Under the “First Look” program, groups will have up to 48 hours to express interest in a property and then another 12 days to do inspections.
Participating banks include Bank of America, Chase, Citi, Deutsche Bank, GMAC, Nationstar Mortgage, Wells Fargo and the West Palm Beach-based Ocwen Financial.
“This is a way for us to assist in the larger housing crisis by providing options for state and local governments to find solutions for homeowners,” said Ocwen Senior Vice President Steven Nesmith.
Some institutions, including Bank of America and FHA, had already started programs similar to “first look,” but not always on a nationwide scale.
Another $1 billion in neighborhood stabilization money is expected to be announced soon.
The additional money will likely be welcomed as banks move swiftly this year to take back properties.
In July alone, more than 10,000 Florida homes were repossessed by banks, a 60 percent increase compared to the same time last year
Another way to keep home prices high, get the government to pay full price…..
I was just remembering the movie “American Beauty” with Annette Benning. She is a realtor who scrubs the clients home for an open house…”I will sell this house today” she says to herself over and over while cleaning. At the end of the scene she slaps herself silly for crying because she didn’t sell it. Love that. Wonder how many realtors are slapping themselves today!
A tidbit to share, while at our closing to sell this week the attorney said he had a closing prior to ours in which the buyers went to their newly purchased home and found out that the sellers
had taken everything they could out of the house, basically short of
burning it down….and he said “nope, it wasn’t a foreclosure”.
Wow, wonder if this is happening all over….sellers feeling there were beaten up financially to sell their homes?
So glad we got out now even with a loss, could have been a lot worse down the road . Happy Renters are we!
If that had happened to me, I would have refused to close and sued for the earnest money since the house was no longer in the same material state as when you agreed to purchase it.
Makes me wonder if the buyers did a walk through before closing(or the sellers backed up to the house the night before closing with a big truck) …I’m sure the lawsuits will be flying…
Hmmm walk through at 10 am….closing at Noon…back truck up at 10:30 am and steal steal steal…well you signed off on the walk through…
true, but can’t the sellers be held liable someway?
I’d be inclined to bring a camera to record to the condition of the property during the final walk-through.
“can’t the sellers be held liable someway”
At that point they should be charged for breaking and entering. Even though the house wasn’t technically “sold”, a judge should consider intent. The existance of a contract and the fact the buyers were on their way to the closing table sure demonstrates an “intent to sell”.
Slim, I would be doing the same at walk through..
Are people so freaked out when they sell that they rip buyers off like this? and who is to say the seller actually stole all appliances and basically defaced the house?
Sounds like it could be a complicated mess..
How can they? They are on the way to the closing…oops just hire the local drug dealers , put ad up and CL free contents of house door is open.. ….. its been done
At that point they should be charged for breaking and entering.
As another anecdote about closing hell, my brother was selling his house, and when they went over to do a final walk through, found that somebody had broken into the house to strip it of appliances. They even stole the front door. (He was already living in another town.)
Needless to say, the buyer walked.
I hope he found another buyer! That is terrible..
I was also concerned about the possiblity of someone stealing our appliances as we had already move out. I went back several times before closing to check as the house was in a rather remote area.
We low-balled ourselves in the selling price… After reading this blog since 2005, we realized that our “wishing” price was unrealistic…lowered our price 60k and sold in 2 weeks..
This is what is happening…sellers hanging onto those higher selling prices…we knew we had to get out now or lose even more later…
When we bought our first townhouse many years ago, we went to the final walkthrough only to find the sellers car and a whole bunch of personal items taking up most of the garage. At closing, we demanded an exhorborant “rent” for one night (since his stuff blocked the movers access and they had to work around the much smaller area around the front door) and an agreement that if he didn’t clean it out by noon the next day, the stuff (including his car) was ours. Not a huge issue in the grand scheme, but it taught us early on that it ain’t really over until its over.
With our last walkthrough the woman was still in the house and was days away from being finished packing. There was stuff everywhere. Then when I called our lawyer to tell him we’d have to push back the closing I found out only after asking he’d agreed w/the other lawyer that we’d pay 1/2 of redrilling the well deeper so it passed the flow rate test. He’d never even called to ask us. Yeah, I think I have a vein that still sticks out of the side of my neck from that day.
You should have made HIM pay that, since you didn’t agree to it. Realtors (in general) don’t care about anything other than getting their commissions.
wow, Carrie..I empathize….that had to be so freaking frustrating.
We were lost between our attorney and buyers attorney….noboby asked us anything.. We were virtually left out of everything…and cost us a lot of money to sell(in attorneys fees)…
Damn this is cool.
And it supports my thesis about 2012.
http://news.yahoo.com/s/atlantic/20100903/cm_atlantic/bloggersderidedentistfundedhillary2012campaignad4910
Payne: The irony of Jesse Jackson’s stripped SUV
Henry Payne / The Michigan View.com
Add Jesse Jackson’s ride to prominent vehicles being stripped in Detroit.
Following the embarrassing news that Mayor Dave Bing’s GMC Yukon was hijacked by criminals this week, Detroit’s Channel 7 reports that the Reverend’s Caddy Escalade SUV was stolen and stripped of its wheels while he was in town last weekend with the UAW’s militant President Bob King leading the “Jobs, Justice, and Peace” march promoting government-funded green jobs.
Read that again: Jackson’s Caddy SUV was stripped while he was in town promoting green jobs.
Add Jesse to the Al Gore-Tom Friedman-Barack Obama School of Environmental Hypocrisy. While preaching to Americans that they need to cram their families into hybrid Priuses to go shopping for compact fluorescent light bulbs to save the planet, they themselves continue to live large.
“We need an economy that creates employment that can’t be shipped overseas,” the Green Rev wrote for CNN about the march. “Home-grown American labor will be installing windmills and solar panels. A green economy is not an abstract concept.”
“Add Jesse Jackson’s ride to prominent vehicles being stripped in Detroit.”
Sheesh! No wonder their housing is so affordable…
Is that the very same Jesse who was caught on a live microphone saying he wanted to “cut off” Obama’s “balls.”
Yeah, quite the stand-up guy.
That’s what I call poetic justice.
I even wrote a haiku about that.
Jackson’s switchblade cuts
scrotal sack of Barry O
nuts fall to the ground.
So how come the Secret Service didn’t whup on Jesse after making that threat?
It`s a good thing for the criminals that Jesse Jackson wasn`t driving a Volt. They probably would have been apprehended when the charge ran out 10 miles down the road.
Fed Vows to Maintain Public Financial Health
And other things to comfort an economy in critical condition
Bill Bonner
Reckoning today from Paris, France…
Extend and pretend…
That’s the government’s way of handling the crisis. Extend credit and cash to those who don’t deserve it. Then, pretend that everything is okay…
But the problems don’t go away. They just get stretched into the future…
What did the feds do for GM? They took over the company. They extended cash and credit. They put in place a “Cash for Clunkers” program to encourage people to buy cars. Then, they pretended that the problems were solved.
But yesterday’s news tells us that “August car sales plunged.”
They hadn’t really solved the problems at all. General Motors still needed to be restructured. And there weren’t really anymore qualified auto buyers than there had been before. They had merely been encouraged to buy sooner…rather than wait until their cars were really worn out.
And look at what happened in the housing market.
July sales set a new record low. Why? Because the feds had encouraged people to buy earlier - by giving them cash incentives, via tax credits. For a while, it looked like the housing industry was picking up. But had any of the real problems been solved?
Nope.
Nearly 15% of all mortgage loans are either overdue or in foreclosure. And nearly one in four houses with mortgages is underwater. Another 5% barely have their heads above water, with equity of 5% or less.
When a house sinks under the waterline - that is, when its market value is less than its mortgage - the owner goes through the usual pattern of disbelief, denial, defeat and eventual desperation. If he loses his job or gets divorced the timeline is shortened. Either way, he ends up in the same place - desperate to get back on the surface where he can breathe again. It takes time. It’s painful. But the longer the housing market takes to recover, the more these people give up and default on their mortgages.
The US financial system is still holding hundreds of billions worth of mortgage debt that isn’t going to be repaid. Who’s going to take those losses?
The feds have already made it clear - it won’t be the big banks. They extended cash and credit to the banks and pretended everything was okay. The Fed itself bought up much of the big banks’ bad mortgage debt already; it holds it in its vault and calls it an “asset.” And the US government nationalized the biggest, most reckless and irresponsible lenders - Fannie Mae and Freddie Mac. So now the taxpayer takes the losses - even if he never bought a house…and never invested a penny in the housing industry.
An excess of discretionary judgment today opens the door to more bailouts tomorrow.
* REVIEW & OUTLOOK
* SEPTEMBER 4, 2010
The Diviner of System Risk
Ben Bernanke as Carnac the Magnificent.
After two more days of hearings this week about the 2008 credit meltdown, the lid on Federal Reserve Chairman Ben Bernanke’s black box remains shut and locked. Testifying Thursday before the Financial Crisis Inquiry Commission, Mr. Bernanke made clearer than ever that financial “systemic risk” is whatever he and his fellow regulators decide it is. Read on and weep at how little has changed despite financial “reform.”
The danger of a systemic financial failure was the government’s catch-all justification for its unprecedented market interventions beginning with Bear Stearns in March 2008. Asked by commissioner Keith Hennessey this week to define “systemic risk,” Mr. Bernanke said that many academics are currently trying to do just that, but there remains a debate about how to measure it. Taxpayers might hope that Mr. Bernanke would demand a clear definition before he commits the next trillion dollars, but that’s probably not the way to bet. The Fed Chairman confidently predicted that determining the level of such risk will largely “remain subjective.”
As bad as this news is for taxpayers, the potentially worse news came when Mr. Hennessey asked if, in times of crisis, the government could still assist a particular company now that Dodd-Frank reform is the law of the land. Mr. Bernanke quickly put the matter to rest by noting that a too-big-to-fail company undergoing the government’s new resolution process could still receive money from the Treasury. Uh, oh.
…
Bernanke and the Fed emerged from the financial reform debate more powerful than ever before.
One doesn’t rise to the top in DC without being a skilled bureaucratic knife fighter.
Will Gross be an invited panelist at this shindig as well?
WSJ Blogs
Real Time Economics
Economic insight and analysis from The Wall Street Journal.
* Fisher: Improved Fiscal, Regulatory Policies Should Activate U.S. Economy
* Bankruptcy Filings Fell Last Month
* September 1, 2010, 5:41 PM ET
Fed, FDIC Team Up to Examine Future of Housing Finance
By Doug Cameron
The U.S. Federal Reserve will co-host a conference on the future of housing finance later in the fall amid intensifying efforts by policy makers and bankers to address a root cause of the financial crisis.
Charles Evans, president of the Chicago Federal Reserve, said the two-day event will be co-hosted with the Federal Deposit Insurance Corp.
He announced the event at a separate conference in Washington focused on the impact of foreclosures and vacant properties on communities and broader economic stabilization.
“Although there are some signs of general economic recovery and some evidence of home price stabilization, we are certainly not out of the woods,” Evans said in the text of a presentation focused on Fed research and education efforts in the housing market.
Evans said the search continued for solutions to a housing crisis that is expected to see as many as three million foreclosures in 2010 and a sixth successive year of declining home ownership.
James Bullard, head of the St. Louis Federal Reserve, said earlier this week that there was “more to come” from the central bank on reform of home finance.
…
Dimon, Fuld, Blankfein, Gross already know what they want Dodd, Frank, Geithner and Bernanke to do. The stuff that happens in front of the cameras is well rehearsed kabuki for public consumption.
Whose money is earmarked to finance this latest underwater top kill attempt?
* REAL ESTATE
* SEPTEMBER 4, 2010
Government to Deploy Broader Mortgage Aid
By NICK TIMIRAOS
The Obama administration on Tuesday will launch its most ambitious effort at reducing mortgage balances for homeowners who owe more than their homes are worth.
Officials say between 500,000 and 1.5 million so-called underwater loans could be modified through the program, the first initiative to target homeowners who are current on their mortgage payments but are at risk of default because they have no equity in their homes. Some experts are warning, however, that the same knots that tied up prior initiatives could do so again.
Under the new “short refinance” program, banks and other creditors that write down mortgages to less than the value of the property can essentially hand off the reduced loan to the government. The process involves refinancing borrowers into loans backed by the Federal Housing Administration.
While the program puts taxpayers at risk—officials estimate one in five loans in the program could default—the government has set aside $14 billion previously earmarked for housing aid from the Troubled Asset Relief Program to cover losses.
The new program, which was announced in March, is starting as the housing market shows signs of renewed trouble and as the Obama administration’s signature Home Affordable Modification Program, or HAMP, falls short of its goals of helping three million homeowners. Half of the 1.3 million borrowers that enrolled in temporary loan modifications have fallen out of HAMP because they didn’t qualify. Only one-third has received permanent modifications.
The initiative also comes as mortgage rates fall to their lowest levels in more than 50 years. Average rates on 30-year fixed-rate loans dropped to 4.43% last week, down from 4.55% during the previous week, according to a survey published Wednesday by the Mortgage Bankers Association.
One of the biggest dangers facing the housing market is the glut of underwater homeowners who could default if their personal finances or home prices worsen. About 11 million borrowers, or 23% households with a mortgage, were underwater as of June 30, according to CoreLogic Inc.
…
Analysis: Mortgage policy guessing game for investors
By Al Yoon
NEW YORK | Thu Sep 2, 2010 4:56pm EDT
NEW YORK (Reuters) - The $5 trillion guaranteed mortgage-backed securities market has long been a technician’s dream, with Wall Street shelling out millions of dollars on models that predict refinancings and interest rate trends.
But today, the biggest variable — government intervention — is a wildcard that cannot be captured by algorithms and is a curveball to the mutual funds, pension managers and other institutional investors who are funding U.S. homeowners via purchases of MBS.
Investors who buy securities issued by Fannie Mae, Freddie Mac and Ginnie Mae have been riled since July by fears that the government would move to boost refinancings. When a loan is refinanced, it creates a “prepayment” of principal to investors, which in today’s market can create a steep loss.
“It’s hard to trade on the probability the government is going to do something,” said Kevin Jackson, a trader at Wells Fargo Securities in Charlotte, North Carolina, who as a former Fannie Mae manager has found himself increasingly interpreting government chatter for customers. “Prepayment models have been pretty useless.”
The frustration has lingered even as analysts and Shaun Donovan, the U.S.’ top housing official, have tried to cool speculation on policy changes.
Some of the biggest influences on the MBS market in the past two years have come from the federal government as it has tried to revive housing. One example is the loan modification program for troubled borrowers.
Weaker-than-expected economic reports last month may provide incentive for the Obama administration to take further steps to bolster housing ahead of the November elections, analysts said.
Investors cannot shake the idea that the government could again inject itself into the market because lenders are limiting the economic benefits of record low interest rates. Bank mortgage rates have not kept pace with the drop in other interest rates, and many lenders have narrowed the field of who qualifies for a loan.
“Underwater” borrowers, whose homes are worth less than what they owe on them, are also less likely to take advantage of lower rates, as they may have to write a check to cover lost equity.
“Policy risk and initiatives by the government are more likely to drive the secondary mortgage market than at virtually any point that I can remember in the last several years,” said Ajay Rajadhyaksha, head of U.S. fixed-income and securitized debt strategy at Barclays Capital in New York.
Economists pondering slowing U.S. growth stirred the controversy more than a month ago. At Morgan Stanley, they suggested a “slam dunk stimulus” could be achieved if the government ignored credit checks and made a sweeping qualification of loans it already guarantees through agencies or Fannie Mae and Freddie Mac.
Investors are edgy as prices for most MBS are at levels that will sustain a loss based on refinancings, especially those created when 30-year mortgage rates were substantially higher than today’s 4.5 percent. Investors betting that tight credit would keep refinancing slow on all MBS have been burned as risks of a U.S. policy shift have led others to sell.
MBS in August returned just 0.16 percent, severely lagging the 2 percent return for U.S. government and corporate debt and raising doubts about future returns, said Jim Vogel, a strategist at FTN Financial in Memphis, Tennessee.
MBS paying 6.5 percent interest flirted with $110 per $100 face value in late July before sliding to $108 by mid-August. A prepayment returns face value to investors.
“If you were to rely on a model, it would tell you to buy every (high interest rate) bond out there,” said Mitch Flack, co-head of TCW’s MBS unit in Los Angeles. TCW manages $109 billion.
Flack and other MBS investors believe “premium” MBS may drop further even without a big policy shift. Small changes within existing programs could have some impact, they said.
What’s more, refinancings are also on the rise because interest rates have hit record lows week after week.
“The mortgage market is on the expensive side right now but it was crazy (costly) a month ago,” said Scott Simon, who oversees MBS and ABS at Newport Beach, California-based Pacific Investment Management Co, which manages more than $1 trillion.
Pimco doubts any big policy shift is coming but thinks the government should make refinancing easier for borrowers locked out due to tighter credit standards such as higher credit scores, Simon said.
…
More Reuters Results for:
* PIMCO’s Gross calls for massive mortgage refinance
Tue, Aug 17 2010
* Shame on You - Mr. Gross! (An open letter to William Gross and all neo-socialists)
Wed, Aug 18 2010
Bloomberg
Gross Urges ‘Full Nationalization’ of Housing Finance
August 17, 2010, 1:28 PM EDT
By Lorraine Woellert and Rebecca Christie
(Adds Berman comment in the 15th paragraph.)
Aug. 17 (Bloomberg) — Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said the U.S. should consider “full nationalization” of the mortgage- finance system as the Obama administration plots the revival of a market that was at the center of the 2008 credit crisis.
“To suggest that there’s a large place for private financing in the future of housing finance is unrealistic,” Gross said today at a U.S. Treasury Department conference in Washington. “Government is part of our future. We need a government balance sheet. To suggest that the private market come back in is simply impractical. It won’t work.”
…
Percentage of homeowners with negative equity by state:
California = 1 out of 3
Arizona = 1 out of 2
Nevada = 2 out of 3
In Deep: Underwater Borrowers
Nearly 11 million households, or 23% of homeowners with mortgages, had negative equity in the first quarter of 2010, according to First American Home Core Logic, a real-estate information company based in Santa Ana, California.
…
* OPINION
* SEPTEMBER 4, 2010
Broke—and Building the Most Expensive School in U.S. History
Benches that talk, a Cocoanut Grove auditorium, and a marble slab engraved with quotes from Ted Kennedy.
By ALLYSIA FINLEY
Los Angeles
At $578 million—or about $140,000 per student—the 24-acre Robert F. Kennedy Community Schools complex in mid-Wilshire is the most expensive school ever constructed in U.S. history. To put the price in context, this city’s Staples sports and entertainment center cost $375 million. To put it in a more important context, the school district is currently running a $640 million deficit and has had to lay off 3,000 teachers in the last two years. It also has one of the lowest graduation rates in the country and some of the worst test scores.
The K-12 complex isn’t merely an overwrought paean to the nation’s most celebrated liberal political family. It’s a jarring reminder that money doesn’t guarantee success—though it certainly beautifies failure.
The cluster of schools is situated on the premises of the old Ambassador Hotel where the New York senator and presidential candidate was shot in 1968. The school district insists that it chose the site not merely for sentimental reasons, but because it was the only space available in the area and the property was dirt cheap.
That was the only cheap thing about the project. In order to build on the site, the school district had to resolve protracted legal battles with Donald Trump—who wanted to build the tallest skyscraper west of the Mississippi there—and with historical conservationists who demanded that certain features be restored or recreated.
Set to open Sept. 13, the school boasts an auditorium whose starry ceiling and garish entrance are modeled after the old Cocoanut Grove nightclub and a library whose round, vaulted ceilings and cavernous center resemble the ballroom where Kennedy made his last speech. It also includes the original Cocoanut Grove canopy around which the rest of the school was built. “It wasn’t cheap, but it was saved,” says Thomas Rubin, a consultant for the district’s bond oversight committee, which oversees the $20 billion of bonds that taxpayers approved for school construction in recent years.
View a slide-show of the school.
I asked Mr. Rubin whether some of the school’s grandiose features—like florid murals of Robert F. Kennedy—were worth the cost. “Did we have to do that? Hell no. But there’s no accounting for taste,” he responded.
…
* THE WEEKEND INTERVIEW
* SEPTEMBER 4, 2010
‘Where There’s Corruption, There’s Opportunity’
The man who took on Saddam and Marcos is trying to break up the Big Three credit-ratings cartel. Can he pull it off?
By JAMES FREEMAN
‘I want to go where there’s a mess,” says Jules Kroll, founder of the corporate detective agency that bears his name. The man who became famous tracking down the ill-gotten wealth of deposed dictators has embarked on a new mission: Two weeks ago, his new Kroll Bond Ratings Agency bought LACE Financial, a firm that analyzes the health of big banks. Mr. Kroll intends to challenge the Big Three credit-ratings agencies—Standard & Poor’s, Moody’s and Fitch.
As formidable as that competition may be, it’s hard to believe Mr. Kroll is entering a tougher environment than the one he inhabited for more than 30 years as the founder of Kroll Inc.
“You always remember your first girlfriend,” says Mr. Kroll, reflecting on the big case that made his reputation in the 1980s. He tracked down hundreds of millions of dollars that former Philippine President Ferdinand Marcos and wife Imelda had stolen from their countrymen and then hidden around the world, including in Manhattan real estate. Mr. Kroll did the work pro bono for Congress, but the publicity burnished a Kroll brand that was already gaining currency on Wall Street.
…
Mr Handheld Device, I’d like you to meet Miss Rosie Palm and her five lovely sisters…
* PAGE ONE
* AUGUST 31, 2010
Only in Japan, Real Men Go to a Hotel With Virtual Girlfriends
Dating-Simulation Game a Last Resort For Honeymoon Town and Its Lonely Guests
By DAISUKE WAKABAYASHI
ATAMI, Japan—This resort town, once popular with honeymooners, is turning to a new breed of romance seekers—virtual sweethearts.
In Love Plus, a Japanese dating simulation game, players experience young romance with a virtual girlfriend. Some have even taken their beloved avatars to an island resort — a real island resort. WSJ’s Akiko Fujita takes a tour of Atami.
Since the marriage rate among Japan’s shrinking population is falling and with many of the country’s remaining lovebirds heading for Hawaii or Australia’s Gold Coast, Atami had to do something. It is trying to attract single men—and their handheld devices.
…
All real estate is
localglobal.The Financial Times
New homes data spell declining market
By Ed Hammond and Norma Cohen
Published: September 3 2010 22:30 | Last updated: September 3 2010 22:30
The nascent recovery in the house building market appears to have ground to a halt as a leading industry survey, which measures the number of people reserving new homes to buy, dropped to its lowest level on record.
The survey, conducted weekly by the Home Builders Federation, is for internal use only and is regarded by the industry as the best guide to housing demand.
But its latest report, seen by the Financial Times, shows that deposits on new properties have dropped below those recorded in 2008, the nadir of the market.
The HBF declined to comment.
The chief executive of one of the UK’s largest housebuilders said the data were “worrying, highly significant and consistent with a falling market”.
In the five weeks through late August, the total net reservations were 3,353, 5 per cent lower than in the 2008 housing market and 22 per cent lower than at the same time in 2009 when house prices were recovering strongly.
Such a sharp drop in new housing demand is a poor omen for house prices generally and for broader economic activity. This week, the Nationwide House Price Index recorded the first back-to-back decline in monthly house prices since February 2009 amid signs of weak mortgage lending.
“Everybody in the industry thought they had died and gone to hell during the second half of 2008,” said one industry official familiar with the figures, noting that times seemed worse, now.
“This is clearly a major warning sign for the housing market and the economy as these leading indicators are strong sign of trouble ahead.”
…
EDITOR’S CHOICE
Weak service data add to slowdown fears - Sep-03
Data point to recovery that will not last - Sep-03
Investors’ QE concern rises - Sep-02
UK house prices on downward trend - Sep-02
Sharp slowdown in UK manufacturing - Sep-01
Businesses fear cuts boost slowdown risk - Aug-30
Daily Brief
by Steve Rosenbush
Sep 02 2010 4:31pm EDT
Bernanke Needs to Cap the Gusher of Cash Leaking From the Equity Well
The plume of cash leaking from the equity well is wide and deep and washing up on the Gold Coast and in the Gulf of Credit. Can Fed chief Ben Bernanke put a cap on the gusher? With all three major U.S. indexes down for the year, just don’t call it a top kill, though.
The Investment Company Institute, the mutual-fund trade association, says in its latest weekly report that once again money flowed out of equity funds. That has been the case since late April. The decline of $4.6 billion was the largest since June, although it is well below the panic-induced outflows of last spring, which peaked at more than $24 billion in May, just after the Flash Crash.
Where is the money going? Mostly into fixed income and into gold, which is soaring in price.
…
Doesn’t “Declaring Victory” imply there must have been a war on? Who was the enemy in this war? The American People, perhaps? Is it the members of the Real Estate Industrial Complex who are supposed to declare victory in their War on American Households?
Me confused.
Too Early to `Declare Victory’ as Housing Revives, Donovan Says
By Lorraine Woellert - Sep 3, 2010 9:01 PM PT
Home sales, showing new signs of life two years after the credit crunch drove down home prices, must gain more ground before policy makers can “declare victory,” Housing and Urban Development Secretary Shaun Donovan said.
“It is too early to certainly declare victory,” Donovan said in an interview for Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend. He said prices picked up over the last year and Americans added $1.1 trillion in equity to their homes.
An index of pending home sales rose an unexpected 5.2 percent in July, the National Association of Realtors reported Sept. 2, after seasonally adjusted pending sales dropped 2.8 percent in June and almost 30 percent in May. July 2010 was down more than 19 percent from a year ago.
When President Barack Obama came into office, “what was driving the housing market was bad loans, today it’s unemployment,” Donovan said.
The administration is putting more emphasis on affordable rental housing and less on homeownership as Obama and Congress work to stabilize home prices and rebuild the U.S. mortgage- finance system, Donovan said.
“We do need to rebalance our priorities,” Donovan said. “Part of that, frankly, is that we have a president who talks about rental housing and is focused on rental housing as an important part of the equation.”
…